EUR/GBP recovers to near 0.8680 as investors brush off soft Eurozone HICP data

• EUR/GBP rebounds to near 0.8680 as investors digest soft Eurozone flash HICP data.
• Eurozone’s inflation grew moderately on an annualized basis in December.
• Investors await ECB Vice President Guindos’s comments in an event for fresh cues on the interest rate outlook.

The EUR/GBP pair recovers its early losses and trades marginally higher to near 0.8680 during the late Asian trading session on Thursday. The pair gains as investors brush off soft Eurozone preliminary Harmonized Index of Consumer Prices (HICP) data for December.

Eurostat reported on Wednesday that the headline HICP grew at an annualized pace of 2%, as expected, slower than 2.1% in November. In the same period, the core HICP – which excludes volatile, such as food, energy, alcohol, and tobacco – rose at a slower pace of 2.3% against estimates and the prior reading of 2.4%.

Month-on-month headline and core HICP rose by 0.2% and 0.3%, respectively, after deflating in November.

Soft Eurozone HICP data is unlikely to influence market expectations for more interest rate cuts by the European Central Bank (ECB) in the near term, as inflation remains close to its 2% target.

During the day, investors will focus on comments from ECB Vice President Luis de Guindos in a fireside chat at Vocento’s 2nd Edition of Next Spain Global at 08:30 GMT.

Meanwhile, the Pound Sterling (GBP) exhibits a mixed performance against its peers in a light United Kingdom (UK) economic calendar week. This week, the British currency is majorly driven by risk sentiment, and expectations about how the Bank of England’s (BoE) monetary policy will flair this year.

Today Markets