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- EUR/GBP weakens to around 0.8720 in Wednesday’s early European session.
- UK CPI inflation rose to 3.4% YoY in December from 3.2% in November.
- ECB’s Lagarde said the latest Trump tariff threats could challenge inflation and the economic outlook over the coming years.
The EUR/GBP cross loses ground to near 0.8720 during the early European session on Wednesday. The Pound Sterling (GBP) edges higher against the Euro (EUR) after the UK Consumer Price Index (CPI) inflation report. Traders will take more cues from the UK Retail Sales report for December, which will be released later on Friday.
Data released by the United Kingdom’s Office for National Statistics on Wednesday showed that the country’s headline CPI rose 3.4% YoY in December, compared to an increase of 3.2% in November. This reading came in above the market consensus of 3.3%. The Core CPI, which excludes the volatile prices of food and energy, climbed 3.2% YoY in December versus 3.2% prior, matching the expectation of 3.2%.
Additionally, the monthly UK CPI inflation climbed to 0.4% in December from a decline of 0.2% in November. Markets projected a rise of 0.4%. The Pound Sterling attracts some buyers in an immediate reaction to the hotter UK CPI inflation data.
European Central Bank (ECB) President Christine Lagarde said on Tuesday that uncertainty has returned due to the latest tariff threats by US President Donald Trump. Lagarde added that Trump’s potential action against European countries could challenge the ECB’s outlook for inflation and economic activity over the coming years. Meanwhile, ECB policymaker Francois Villeroy de Galhau stated that any new tariffs must be assessed, adding that he expects their influence on prices to be “muted.”
The UK December Retail Sales data will take center stage on Friday. In case of a stronger-than-expected outcome, this could boost the Pound Sterling and act as a headwind for the cross in the near term.
