The Impact of UK and German Economic Data on EUR/GBP
EUR/GBP Movement
- The EUR/GBP pair is trading near 0.8330 after a decline.
- The Pound Sterling (GBP) strengthens due to higher UK Consumer Price Index (CPI) data.
UK Economic Data
In October, the UK CPI inflation rose to 2.3% year-over-year, the highest in six months, surpassing expectations and up from 1.7% in September. Key points include:
- CPI increased by 0.6% on a monthly basis, following no change in September.
- Core CPI, excluding volatile food and energy prices, rose to 3.3% year-over-year.
- Retail Price Index climbed to 3.4% year-over-year.
German Economic Data
In October, the German Producer Price Index (PPI) fell by 1.1% year-on-year, marking the 16th consecutive period of producer deflation. Key insights:
- Producer prices rose by 0.2% on a monthly basis, rebounding from the previous month.
ECB and Market Expectations
The European Central Bank (ECB) has cut rates three times since June as inflation nears its 2% target. Market forecasts include:
- Anticipation of a 25-basis-point rate cut next month.
- Possible larger rate reductions are also under consideration.
Upcoming Events
Investors await:
- ECB President Christine Lagarde’s remarks at the ECB’s Conference on Financial Stability.
- Release of preliminary Purchasing Managers’ Index (PMI) figures from the Eurozone and Germany.
Economic Indicator: Consumer Price Index (YoY)
The UK Consumer Price Index (CPI) measures consumer price inflation and is used as the inflation target by the government. Key details include:
- The YoY reading compares prices in the reference month to a year earlier.
- High CPI readings are bullish for the Pound Sterling (GBP).