Pound euro exchange rate ticks up amid hotter-than-expected UK CPI
The pound euro (GBP/EUR) exchange rate is drifting higher this morning following the publication of the UK’s latest consumer price index.
At the time of writing, GBP/EUR is trading at around €1.1870, up roughly 0.3% from this morning’s opening levels.
Pound (GBP) buoyed by CPI data
The pound (GBP) is edging higher against the majority of its peers this morning, supported by the publication of the UK’s latest inflation data.
The Office for National Statistics (ONS) revealed that headline inflation remained unchanged in August and held steady at 2.2% rather than dipping to 2.1% as forecast.
Core inflation rose more than expected in the same time period, jumping from 3.3% to 3.6% rather than a more modest 3.5% estimate.
The Bank of England’s (BoE) preferred measure of inflation also warmed, with services inflation rising from 5.2% to 5.6%.
The latest set of inflation data has all but cemented an expected interest rate hold from the BoE tomorrow, bolstering Sterling in the process.
Sam North, Market Analyst at trading platform eToro commented:
‘UK services inflation slightly exceeded expectations in August at 5.6% year-on-year, prompting a brief hawkish lift in GBP [the pound]. However, the release is unlikely to significantly impact the BoE’s upcoming policy decision, with an unchanged Bank Rate still expected.’
Euro (EUR) dips following Eurozone inflation
The euro (EUR) is struggling to garner investor attention this morning, and is ticking lower against the majority of its peers, following the publication of the Eurozone’s finalised CPI reading.
The finalised index confirmed that headline inflation dropped from 2.6% to 2.2% while core inflation fell from 2.9% to 2.8%.
This morning’s data confirmed that inflation in the bloc has fallen to a three-year low, bolstering European Central Bank (ECB) interest rate cut bets and undermining the euro in the process.
Pound euro exchange rate forecast: BoE rate decision in the spotlight
Looking ahead, the primary catalyst of movement for the pound euro exchange rate looking ahead to tomorrow will be the publication of the Bank of England’s latest interest rate decision.
As a BoE interest rate hold is almost fully priced in, GBP will likely firm against its peers should the central bank follow suit and keep rates unchanged.
However, should the BoE enact a surprise rate cut, Sterling will likely falter against its peers.
Turning to the euro, economic data releases will be few and far between for the remainder of the week, and as such could see the single currency trade in line with market expectations.