EUR/GBP holds below 0.8450 as UK CPI inflation steadies at 2.2% YoY in August

• EUR/GBP weakens around 0.8445 in Wednesday's early European session. 
• The UK annual CPI climbed 2.2% in August vs. 2.2% expected.
• Investors will shift their focus to the Eurozone HICP inflation for August, which is due on Wednesday. 

The EUR/GBP cross loses its recovery momentum near 0.8445 during the early European session on Wednesday. The Pound Sterling (GBP) edges higher after the UK inflation data. The attention will shift to the Eurozone Harmonized Index of Consumer Prices (HICP) data, wishes to you later in the day. 

Data released by the Office for National Statistics showed on Wednesday that the UK CPI rose at an annual pace of 2.2% in August. The figure was in line with the market consensus and the previous reading of 2.2%. Meanwhile, core CPI, excluding volatile food and energy items, climbed 3.6% YoY in August versus 3.3% in July, hotter than the 3.5% expected. The GBP attracts some buyers in an immediate reaction to the UK CPI inflation data. 

The Bank of England (BoE) interest rate decision will be in the spotlight on Thursday. The UK central bank is anticipated to keep rates on hold before adopting a more aggressive stance from November. The odds of another 25 basis points (bps) rate cut in September increased but remain relatively low nearly 35%, according to LSEG data.

On the Euro front, the European Central Bank (ECB) Governing Council member Martins Kazaks said on Monday that the central bank will ease monetary policy further, though it shouldn't do so too hastily due to lingering inflation risks. Less dovish interest rate guidance from European Central Bank (ECB) officials might help limit the Euro's losses against the GBP.

The Eurozone HICP inflation might offer some hints about the inflation trajectory in the Eurozone and influence the ECB about the next move. The HICP is estimated to show an increase of 2.2% YoY in August, while the core HICP is forecasted to show a rise of 2.8% in the same period.