The pound euro (GBP/EUR) exchange rate is rising after steep losses yesterday.
The pound rose despite softer UK inflation data. Headline CPI cooled to 3% in January from 3.4%, while core inflation eased to 3.1%, reinforcing expectations that the Bank of England will cut rates as soon as March.
Markets now price in a near 90% chance of a spring cut.
The euro is under pressure even after German inflation rose to 2.1%, up from 1.8% in December and slightly above the ECB’s target midpoint.
However, the data is unlikely to alter expectations that the ECB will keep rates unchanged this year.