EUR/GBP rises to its highest level since May post UK CPI data

The The EUR/GBP cross peaked at a daily high of 0.8700 and then settled near 0.8660. UK’s headline CPI declined to 7.9% YoY, lower than expected.

Lower British yields and dovish bets on the BoE made the GBP struggle to find demand on Wednesday. The EUR/GBP set a fourth consecutive day of gains and rose to its highest level since late May but faced resistance at the 100-day Simple Moving Average (SMA) at 0.8700 and then retreated to 0.8657.

As UK inflation figures came in lower than expected, the GBP trades with losses against most of its rivals on Wednesday, including the USD, EUR, JPY, CAD, etc.

Investors are confident that the BoE won’t be as aggressive as expected amid soft CPI. According to the Office for National Statistics, the Consumer Price Index fell to 7.9% year on year in June, lower than the 8.2% predicted and the preceding 8.7%. The Core CPI fell to 6.9% and also fell short of the estimates of 7.1%. As a result, UK shorter-term bond yields fell as much as 4% as markets bet on a dovish Bank of England.