The pound euro exchange rate (GBP/EUR) is rising towards €1.19, recouping yesterday’s losses.
The pound is rising after UK inflation data showed that headline CPI was 2.2% YoY in August, unchanged from July. However, core CPI and service sector inflation were hotter than expected, reinforcing the view that the Bank of England will not cut interest rates tomorrow.
The market is pricing in a 25 basis point rate count in November.
EUR is falling after August inflation was revised lower to 0.1% growth MoM, down from 0.2%.
ECB policymaker Villeroy de Galhau said that the ECB will likely continue cutting rates.
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