Euro extends gains against British Pound as Eurozone inflation accelerates
- EUR/GBP appreciated for the fifth day in a row, reaching session highs above 0.8550.
- Eurozone final HICP figures confirm that price pressures accelerated in July.
- In the UK, hotter CPI and soft employment figures have left the Pound on the defensive.
The Euro (EUR) trades higher against the British Pound (GBP) on Wednesday, on track for a five-day winning streak, and received additional support after Eurozone final inflation figures confirmed higher price pressures in July. The EUR/GBP has reached session highs at 0.8560 after bouncing from last week’s lows, at 0.8530.
Eurozone’s final Harmonised Index of Consumer Prices (HICP) confirmed preliminary data pointing to an acceleration to a 2.9% year-over-year (Y-o-Y) rate in July, from 2.8% in June. Likewise, the Core HICP ticked up to a 2.5% Y-o-Y growth rate in July from 2.4% in the previous year.
Month-over-month, the HICP bounced up to a 0.2% gain after a 0.1% contraction in June, while the core HICP remained flat for the second consecutive month.
These figures strengthen the case for an interest rate hike by the European Central Bank (ECB) in September, particularly after ECB official and Finnish Central Bank Governor Olli Rehn reiterated earlier on Wednesday that “keeping inflation expectations anchored is essential”
UK data shows hotter inflation and a softer labour market
Earlier on the day, UK Consumer Price Index (CPI) data revealed that inflation accelerated to a 0.3% rate in July, from 0.1% in May and 2.9% year-over-year (Y-o-Y) from 2.6% in the previous month, in line with market expectations.
The Core CPI grew at a 2.6% Y-o-Y rate, unchanged from the previous month, against the market consensus for a slowdown to a 2.5% yearly rate. The impact of these figures on the Pound, however, was minimal.
These figures follow a mixed UK employment report which put the Pound under pressure on Tuesday. The ILO Unemployment Rate remained steady against expectations of a slight decline, employment growth slowed down, the number of jobless claimants declined unexpectedly, and wage growth accelerated after having remained steady over the previous three months.
(This story was corrected on August 19 at 10:33 GMT to say the UK employment report put the Pound under pressure on Tuesday, and not on Monday, as previously stated.)
Economic Indicator
Harmonized Index of Consumer Prices (YoY)
The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Last release: Wed Aug 19, 2026 09:00
Frequency: Monthly
Actual: 2.9%
Consensus: 2.9%
Previous: 2.9%
Source: Eurostat
Economic Indicator
Core Harmonized Index of Consumer Prices (YoY)
The Core Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, – released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Core HICP excludes volatile components like food, energy, alcohol, and tobacco. The Core HICP is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Last release: Wed Aug 19, 2026 09:00
Frequency: Monthly
Actual: 2.5%
Consensus: 2.5%
Previous: 2.5%
Source: Eurostat
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
