EUR/GBP rises to near 0.8700 following UK CPI data

EUR/GBP gains ground as the UK Consumer Price Index rose 3.8% YoY in September, against the 4.0% expected.
The Pound Sterling struggled as UK government borrowing exceeded expectations by £7.2 billion in the fiscal year’s first half.
Traders await speeches from ECB officials this week for clues on the policy outlook.

Akhtar Faruqui FXStreet

EUR/GBP appreciates after three days of losses, trading around 0.8700 during the Asian hours on Wednesday. The currency cross receives support as the Pound Sterling (GBP) faces challenges following the release of the United Kingdom’s (UK) Consumer Price Index (CPI) and Retail Price Index data for September.

The UK headline Consumer Price Index (CPI) rose 3.8% year-over-year (YoY) in September, against the market expectations of a 4.0% increase in the reported period. The reading was well above the Bank of England’s (BoE) 2% inflation target. Meanwhile, the core CPI (excluding volatile food and energy items) rose 3.5% YoY, compared to August’s 3.6% print, while missing the forecast of 3.7%.

The UK government borrowed £7.2 billion more than expected in the first half of the fiscal year, with the budget deficit rising to £99.8 billion. This exceeded the Office for Budget Responsibility’s (OBR) £92.6 billion forecast, as debt interest payments surged 66% to £9.7 billion in September — the highest on record for the month.

Traders adopt caution ahead of a series of speeches from European Central Bank (ECB) officials this week for clues on the policy outlook. The ECB will enter its pre-meeting blackout period on Thursday ahead of next week’s policy decision. Traders have increased bets on monetary easing, fully pricing in a 25-basis-point rate cut by July 2026.

Traders remain cautious after S&P Global lowered France’s credit rating to A+ from AA-, citing “elevated” budget uncertainty despite the government’s submission of its 2025 draft budget. The downgrade followed a week of political turmoil where French Prime Minister Sebastien Lecornu barely survived two no-confidence votes in parliament after sacrificing President Emmanuel Macron's unpopular 2023 pension reform.

Economic Indicator

Consumer Price Index (YoY)

The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Why it matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

EUR/USD: Breakdown below trading range support near 1.1770 comes into play

The EUR/USD pair opens with a bearish gap at the start of a new week as the US-Iran war-led global flight to safety boosts the US Dollar. Spot prices, however, lack follow-through selling and manage to hold above mid-1.1700s during the Asian session.

GBP/USD targets 1.3500 barrier near moving averages

GBP/USD rebounds from the daily losses, trading around 1.3450 during the Asian hours on Monday. The technical analysis of the daily chart indicates an ongoing bearish bias, as the pair trades within a descending channel pattern.

Gold retreats from $5,400; still up over 1% amid Middle East tensions

Gold retreats from the $5,400 neighborhood, or its highest level since late January, touched in the Asian session on Monday, though it manages to hold above the $5,300 round figure. The bright metal opened with a bullish gap of about $17 and rallied toward the $5,400 level as Asian traders hit their desks and reacted negatively to the weekend news of the US and Israel attacks on Iran, rushing for cover in Gold.

Top Crypto Losers: Tezos, Toncoin, and Polkadot at crucial levels amid US-Israel strike on Iran

Altcoins such as Tezos, Toncoin, and Polkadot rank among the worst hit cryptocurrencies over the last 24 hours amid the US and Israel's attack on Iran. Tezos and Toncoin are down to crucial support levels while Polkadot remains near a crucial resistance trendline, showcasing underlying strength.

The market is paying for insurance, not apocalypse

As expected, this morning felt less like a Monday market open and more like a fire drill. Futures screens flickered red. S&P contracts down almost 1%. Nasdaq off 1.2%. Brent leaped 13% through $80. Gold rose 1.6% toward $5350 before paring some gains. The dollar is strutting mildly. The Swiss franc is quietly doing what it always does in a storm, catching some safe-haven flows.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.