The pound euro (GBP/EUR) exchange rate is heading higher after two days of losses.

The pound is rising after UK CPI rose to 4% YoY in December, up from 3.9% in the previous month and ahead of the 3.8% forecast. Corew CPI also held steady at 5.1%, highlighting the sticky nature of inflation.

The market has reined in BoE rate cut bets after the data, pushing GBP higher.

The euro is falling after ECB President Christine Lagarde said that a rate cut is likely in the summer.

Her comments came after EZ CPI rose to 2.9% YoY in December up from 2.4% in November.