In the early European session on Wednesday, EUR/GBP gains strength and approaches 0.8445.
In December, UK CPI inflation decreased to 2.5% YoY from an anticipated 2.7%.
Rehn of the ECB stated that it makes sense to keep lowering interest rates.
Early Wednesday morning European trading hours see the EUR/GBP cross continue its upward trend to approximately 0.8445. Following the lower-than-expected UK Consumer Price Index (CPI) inflation data for December, the GBP depreciates versus the common currency. The Eurozone Industrial Production will be made public later on Wednesday. On the same day, Luis de Guindos, vice president of the European Central Bank (ECB), will also give a speech.
According to data released on Wednesday by the UK's Office for National Statistics, the headline CPI increased 2.5% year over year in December as opposed to 2.6% in November. This reading was lower than the anticipated 2.7%. The Core CPI, which does not include the volatile prices of food and energy, increased 3.2% YoY in December as opposed to 3.5% earlier, which was less than the 3.4% market consensus. In the meantime, the UK CPI inflation rate rose from 0.1% in November to 0.3% in December. The market anticipated a print of 0.4%.
In response to the negative UK CPI inflation data, some sellers immediately target the pound sterling. Furthermore, the GBP may continue to be weakened by worries about the UK's fiscal sustainability and growing bond yields. Higher borrowing costs, according to analysts, might compel the government to reduce spending or increase taxes in order to comply with fiscal regulations, which could have an adverse effect on future growth in the UK.
Because of the Eurozone's poor economic outlook, traders anticipate three or four rate cuts in 2025, following the ECB's four rate cuts last year. The Euro may then experience some downward pressure in relation to the GBP as a result. "It makes sense to continue rate cuts given that disinflation is on track and the growth outlook has weakened," stated Olli Rehn, a member of the ECB Governing Council, on Monday.
In December, UK CPI inflation decreased to 2.5% YoY from an anticipated 2.7%.
Rehn of the ECB stated that it makes sense to keep lowering interest rates.
Early Wednesday morning European trading hours see the EUR/GBP cross continue its upward trend to approximately 0.8445. Following the lower-than-expected UK Consumer Price Index (CPI) inflation data for December, the GBP depreciates versus the common currency. The Eurozone Industrial Production will be made public later on Wednesday. On the same day, Luis de Guindos, vice president of the European Central Bank (ECB), will also give a speech.
According to data released on Wednesday by the UK's Office for National Statistics, the headline CPI increased 2.5% year over year in December as opposed to 2.6% in November. This reading was lower than the anticipated 2.7%. The Core CPI, which does not include the volatile prices of food and energy, increased 3.2% YoY in December as opposed to 3.5% earlier, which was less than the 3.4% market consensus. In the meantime, the UK CPI inflation rate rose from 0.1% in November to 0.3% in December. The market anticipated a print of 0.4%.
In response to the negative UK CPI inflation data, some sellers immediately target the pound sterling. Furthermore, the GBP may continue to be weakened by worries about the UK's fiscal sustainability and growing bond yields. Higher borrowing costs, according to analysts, might compel the government to reduce spending or increase taxes in order to comply with fiscal regulations, which could have an adverse effect on future growth in the UK.
Because of the Eurozone's poor economic outlook, traders anticipate three or four rate cuts in 2025, following the ECB's four rate cuts last year. The Euro may then experience some downward pressure in relation to the GBP as a result. "It makes sense to continue rate cuts given that disinflation is on track and the growth outlook has weakened," stated Olli Rehn, a member of the ECB Governing Council, on Monday.
