The pound euro (GBP/EUR) exchange rate is rising after steep losses yesterday.

The pound has jumped after UK inflation unexpectedly rose to 10.4% up from 10.1%. Expectations had been for a fall to 9.9%. Core inflation also unexpectedly rose to 6.2% up from 5.8%

The data cements expectations of a 25 basis point hike in the BoE MPC meeting tomorrow.

The euro rose yesterday as as fears over the health of the European banking calmed.

ECB President Christine Lagarde also said that the current levels of inflation warrant higher interest rates for longer.

This overshadowed weaker-than-expected German ZEW economic sentiment data which dropped to 13 from 28.1.

Today ECB President Lagarde is due to speak again.