On Wednesday, the EUR/GBP pair rose to 0.8580, overcoming a key resistance level. This was in response to softer UK inflation data that weighed on Pound Sterling throughout the day. The market is now anticipating a potential rate cut by the Bank of England in September, with a 45% chance currently estimated.
The Office for National Statistics in the UK reported a year-on-year inflation rate of 2.2% in July, slightly lower than market expectations of 2.3%. This, combined with a decrease in core CPI growth, led to a decrease in interest in Pound Sterling. Tuesday’s movements saw the Pound gain strength following positive employment data, but Wednesday’s inflation figures reversed that trend.
The upcoming BoE policy meeting on September 19 will be crucial in determining the future direction of the Pound. The EUR/GBP pair has been on a bullish trend in recent sessions, with the RSI fluctuating around mid-range values, suggesting a strengthening bullish momentum. The MACD indicators also confirm the presence of buyers, with steady green bars on the daily chart.
Overall, the market sentiment towards the Pound is cautious, as investors keep a close eye on any potential developments regarding a rate cut by the BoE. The softer UK inflation data has added pressure on Pound Sterling, leading to a rise in the EUR/GBP pair. Traders will be closely monitoring any further economic indicators and central bank actions in the coming weeks to gauge the future direction of the currency pair.
