EUR/GBP Holds Gains Around 0.8550 After UK CPI Inflation Data; BoE Rate Stability Expected

EUR/GBP Holds Gains Around 0.8550 After UK CPI Inflation Data

The EUR/GBP currency pair continues to strengthen for the third consecutive day, trading near 0.8560 in early European trading on Wednesday. The gains follow the release of UK Consumer Price Index (CPI) inflation figures that came in line with expectations but signal easing inflation pressure.

UK Inflation Data Supports BoE Rate Stability

The Office for National Statistics (ONS) reported UK CPI inflation rose 3.4% year-on-year in May, slightly lower than April's 3.5%. Although still above the Bank of England’s (BoE) 2% target, the softer data increases market optimism for a pause in rate hikes at the upcoming BoE meeting on Thursday.

Monthly CPI inflation slowed significantly to 0.2% in May from 1.2% in April, aligning with forecasts. Core CPI, which excludes volatile food and energy prices, rose 3.5% YoY, down from 3.8% in April and below the expected 3.6%.

ECB Commentary on Monetary Policy and Geopolitical Risks

ECB policymaker Villeroy commented that the central bank remains well-positioned on monetary policy amid current geopolitical tensions, which continue to impact markets globally.

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• UK CPI Inflation Latest Figures
• Bank of England Interest Rate Forecast
• EUR/GBP Exchange Rate Analysis
• Impact of Geopolitical Tensions on Forex Markets