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Euro holds near 0.8580 versus pound as ECB and BoE hike bets offset

EUR/GBP was little changed around 0.8580, as German producer prices rose 3.0% year over year in July while UK CPI climbed to 2.9%, keeping rate-hike expectations active for both central banks.

Reported · Written up by our desk · Major Pairs

EUR/GBP was trading around 0.8580 with little change on the day, as investors weighed competing monetary tightening expectations for the European Central Bank and the Bank of England, according to FXStreet.

The backdrop in Europe included persistent inflation risks, with sharp increases in European natural gas prices linked to supply disruptions in the Middle East, and a German data release that showed producer prices rising 3.0% year over year in July, accelerating from the prior month and topping the 2.7% forecast.

In the euro area’s largest economy, producer prices also rebounded 1.1% on a monthly basis, which reinforced expectations that the ECB could continue its tightening cycle at its September meeting.

For the UK, inflation was supported by data showing CPI at 2.9% year over year in July, up from 2.6% in June, while core inflation held at 2.6%. FXStreet noted money markets continue to price a potential BoE hike by the end of the year that would take the Bank Rate from 3.75% to 4.0%.

Latest closeNat gas $2.715 ▼0.4%

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