The Euro rises 0.9% against the Pound this week as UK inflation data reduces BoE rate hike expectations.
The Euro extended its rally against the British Pound for a sixth day, trading near 0.8645 as markets await the European Central Bank’s monetary policy decision. The pair has climbed nearly 0.9% this week, marking its strongest performance since May, driven by Sterling weakness rather than Euro strength.
UK inflation figures released Wednesday fell short of expectations, dampening bets on an imminent Bank of England rate hike. Political uncertainty over Prime Minister Andrew Burnham’s spending plans has also weighed on the Pound, raising concerns about fiscal stability. Meanwhile, the ECB is expected to hold rates steady but signal potential tightening in September.
Analysts at Commerzbank anticipate the ECB will keep rates unchanged today while leaving the door open for a hike to 2.50% in September, pending updated economic forecasts. The Euro’s resilience reflects market positioning ahead of the decision, though currency strategists remain cautious on its near-term outlook.