EUR/GBP remains depressed below 0.8700 after hot UK CPI figures

• EUR/GBP extends losses for the second consecutive day and trades below 0.8700.
• UK consumer price figures confirm the inflationary impact of the US-Iran war.
• In the Eurozone, ECB speakers, including President Lagarde, will grab some attention later in the day.

The Euro (EUR) is heading south for the second consecutive day against the British Pound (GBP) on Wednesday, trading near session lows below 0.8700, as UK inflation figures put pressure on the Bank of England to bring the possibility of an interest rate hike back to the table.

Data released by the Office for National Statistics earlier on Wednesday showed that the UK Consumer Prices Index (CPI) accelerated to a 3.3% year-on-year (YoY) rate in March. These figures follow two consecutive months of prices growing steadily by 3% YoY, and highlight the inflationary impact of the Middle East war.

The monthly CPI accelerated by 0.7%, its highest level in almost one year, beating expectations of a 0.6% increase, and following a 0.4% gain in February.

Likewise, producer and retail prices have increased beyond forecasts. The Input Producer Prices Index (PPI) surged 4.4% in March and 5.4% year on year. Retail prices rose 0.8% from February and 4.1% over the last 12 months, both above market expectations of 0.7% and 3.9%, respectively.

The Bank of England (BoE) meets on April 30 and is widely expected to keep interest rates unchanged. The upside risks to inflation, however, are likely to give hawkish committee members grounds to call for some monetary tightening down the road.

In the Eurozone, the focus on Wednesday will be on a slew of European Central Bank (ECB) speakers, including President Christine Lagarde, later in the day. The ECB is also expected to keep its monetary policy on hold at its April meeting, and therefore, they are likely to stick to the mantra of waiting for further economic data.