EUR/GBP sits near one-month peak, comfortably above mid-0.8400s amid rising BoE rate cut bets

• EUR/GBP trades with a positive bias for the second straight day on Wednesday.

• The divergent BoE-ECB expectations continue to act as a tailwind for spot prices.

• Traders now await the US CPI report before positioning for further appreciation.

The EUR/GBP cross touched a one-month high, around the 0.8465-0.8470 region during the Asian session on Wednesday, though it lacks follow-through buying. The fundamental backdrop, however, suggests that the path of least resistance for spot prices is to the upside.

The British Pound (GBP) continues with its relative underperformance on the back of Tuesday's disappointing UK jobs data, which lifted bets that the Bank of England (BoE) will cut interest rates twice this year. In contrast, the European Central Bank (ECB) last week signaled that the end of the rate-cutting cycle is nearing. The divergent BoE-ECB expectations turn out to be a key factor acting as a tailwind for the EUR/GBP cross.

Adding to this, the previous day's breakout through a short-term trading range validates the near-term positive outlook and supports prospects for additional gains. Bullish traders, however, seem reluctant to place fresh bets and opt to wait for the release of the US consumer inflation figures, which might infuse volatility in the markets and provide a fresh impetus to the EUR/GBP cross later during the North American session.

In the absence of any relevant market-moving macroeconomic data, either from the Eurozone or the UK, the constructive setup might continue to act as a tailwind for spot prices. Hence, any corrective pullback could be seen as a buying opportunity and is more likely to remain cushioned.