Revised Eurozone PMIs and higher-than-expected inflation data reinforce expectations for further ECB rate hikes.
EUR/GBP traded around 0.8635 on Wednesday, showing minimal movement as investors digested revised Eurozone PMI data and inflation figures. The HCOB Services PMI was upgraded to 47.7 from 46.4, while the Composite PMI rose to 48.5 from 47.5, signaling a slower contraction in private sector activity than initially estimated.
Eurozone inflation pressures persisted, with the core Harmonized Index of Consumer Prices (HICP) rising 2.5% YoY in May, above the 2.4% forecast. Producer prices also accelerated, climbing 0.6% MoM in April and 4.9% YoY, exceeding expectations. The data align with recent hawkish comments from ECB policymakers, including Olli Rehn and Gediminas Simkus, who suggested further rate increases may be necessary to curb inflation.
The shared hawkish stance between the ECB and Bank of England has limited volatility in the currency pair, despite the upgraded economic indicators.