Market Analysis

July sees EUR/GBP rise beyond 0.8550 as UK CPI inflation decreases to 2.2% YoY

Amos Simanungkalit · 14 Aug 20246.4K Views

The EUR/GBP pair is showing a slight increase, nearing 0.8570 during the early European session on Wednesday. The Pound Sterling (GBP) has lost momentum following the release of the UK Consumer Price Index (CPI) inflation data for July. Meanwhile, investors are keeping an eye on the Eurozone's Gross Domestic Product (GDP) for the second quarter (Q2), set to be released later today.

According to data published by the Office for National Statistics on Wednesday, the UK's CPI rose 2.2% year-on-year in July, up from 2.0% in June. This increase was below market expectations of 2.3%. Additionally, the Core CPI, which excludes volatile food and energy prices, increased by 3.3% year-on-year in July, compared to 3.5% in the previous month, and fell short of the forecasted 3.4%. The softer-than-expected UK inflation data has added selling pressure to the GBP, as it has raised expectations for a possible interest rate cut by the Bank of England (BoE) in August.

Looking ahead to Thursday, traders will turn their focus to the UK GDP for Q2, which is expected to show a 1.0% year-on-year growth. On a quarterly basis, GDP is forecasted to increase by 0.6% in Q2.

As for the Euro, the Eurozone's Q2 GDP data will also be released, with the economy expected to grow by 0.3% quarter-on-quarter and 0.6% year-on-year. If the GDP growth figures come in weaker than anticipated, it could weigh on the Euro (EUR), potentially limiting the EUR/GBP pair's downside.