EUR/GBP climbs toward 0.8565 as European markets open Wednesday
UK March CPI surprises at 2.6% versus 2.7% forecast
Market consensus expects ECB to reduce deposit rate to 2.25% on ethereum newsThursday
The EUR/GBP cross demonstrates upward momentum in early European trading hours, approaching the 0.8565 level. This movement follows the release of softer-than-anticipated UK inflation figures, which showed the Consumer Price Index rising 2.6% year-over-year in March, below both February's 2.8% reading and market expectations of 2.7%.
Core inflation figures, excluding volatile food and energy components, matched projections at 3.4% annually. The monthly CPI increase moderated to 0.3% from February's 0.4%, contrary to analysts' predictions of maintaining the previous month's pace. These developments immediately impacted currency valuations, with sterling showing vulnerability against the euro.
Attention now turns to upcoming Eurozone inflation metrics, particularly the Harmonized Index of Consumer Prices scheduled for release later Wednesday. Meanwhile, financial markets have fully priced in expectations for the European Central Bank to implement another 25 basis point reduction in its deposit facility rate during Thursday's policy meeting.
This potential adjustment would mark the ECB's third consecutive rate cut, following reductions in January and March that brought the deposit rate down to its current 2.5% level. Market observers note that global economic uncertainties, including potential trade policy shifts, continue influencing central bank decision-making processes across currency zones.