EUR/GBP rises amid disappointing UK inflation data

• EUR/GBP rose to 0.8580, overcoming a key resistance level.
• Softer UK inflation data suppressed Pound Sterling during Wednesday's session.
• Markets are strongly considering a cut in September by the BoE.

Wednesday saw the EUR/GBP pair rise towards 0.8580, with softer-than-expected inflation data from the UK weighing on Pound Sterling. This contrasts Tuesday's movements, when the strength of the Pound was elevated by more positive UK employment data as lower inflation figures might prompt a more dovish Bank of England (BoE).

The UK's Office for National Statistics reported that inflation in the UK, measured by the Consumer Price Index (CPI), rose to a yearly 2.2% in July from 2% in June, below the market expectation of 2.3%. Similarly, the core CPI growth decreased to 3.3% down from 3.5% recorded in June. The initial market reaction to these figures resulted in diminished interest in Pound Sterling.

The next policy meeting from the BoE is on September 19, and the market currently estimates nearly a 45% chance of a rate cut.

EUR/GBP technical analysis

The EUR/GBP has shown a general bullish trend in recent sessions. The Relative Strength Index (RSI) of the EUR/GBP pair fluctuates around mid-range values, indicating the bulls are gathering strength and have more way to go. The highest RSI was around 62, hinting toward a slight overbuying presence. The Moving Average Convergence Divergence (MACD) shows steady green bars, confirming the presence of the buyers.

EUR/GBP daily chart