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Euro steadies above 0.8540 against pound after hotter German inflation

German HICP rose to 2.8% year over year in July, with energy inflation jumping to 7.3%.

Reported · Written up by our desk · Major Pairs

The euro trimmed earlier losses versus the British pound on Wednesday, with EUR/GBP recovering to levels above 0.8540 after session lows, although it remained under pressure from recent declines from last week’s highs above 0.8580.

FXStreet attributed the move partly to hotter German inflation data. Germany’s preliminary Harmonised Index of Consumer Prices accelerated to 2.8% year over year in July, up from 2.4% in June, as energy inflation rose to 7.3% from 2.7%.

The pound held up better than the euro amid heightened Middle East tensions, which have also pushed oil prices higher. FXStreet noted that Brent moved beyond $88.00 a barrel, about 13% above last week’s highs, raising inflation concerns for Eurozone oil importing economies.

With no UK data scheduled for Wednesday, markets were set to focus on the second quarter preliminary GDP release due Thursday. FXStreet cited Brown Brothers Harriman expectations for real GDP growth of 0.4% quarter over quarter versus 0.6% in Q1, and said the Bank of England is more cautious with a 0.3% forecast, warning that a weak GDP print could leave UK rate pricing vulnerable to dovish repricing against the pound.

Latest closeBrent $89.26 ▲1.8%

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