EUR/GBP trims recent gains below 0.8450 after hotter UK CPI data

• EUR/GBP pares gains to around 0.8435 in Wednesday's early European session. 
• UK CPI inflation climbed to 3.5% YoY in April, hotter than expected. 
• ECB's Knot said another rate cut in June cannot be ruled out. 

The EUR/GBP cross trims recent gains near 0.8435 during the early European session on Wednesday. The Pound Sterling (GBP) edges slightly higher against the Euro (EUR) after the release of UK Consumer Price Index (CPI) inflation data for April. Later on Wednesday, the European Central Bank (ECB) policymakers are scheduled to speak, including Luis De Guindos, Phillip Lane, José Luis Escrivá. 

Data released by the United Kingdom's Office for National Statistics on Wednesday showed that the country's headline CPI climbed 3.5% YoY in April, compared to a 2.6% rise in March. This reading came in hotter than the 3.3% expected. The core CPI, which excludes the volatile prices of food and energy, jumped 3.8% YoY in April versus 3.4% prior, above the market consensus of 3.6%. 

Meanwhile, the monthly UK CPI inflation rose to 1.2% in April from 0.3% in March. Markets estimated a 1.1% reading. The Pound Sterling attracts some buyers in an immediate reaction to the hotter-than-expected UK CPI inflation data.

Traders raise their bets that the ECB will cut its interest rates further due to growing concerns over Eurozone growth. ECB Governing Council member Klaas Knot said another rate cut is possible next month, though he stressed that it's premature to make decisions without seeing fresh quarterly forecasts.

The markets have priced in nearly a 90% possibility of an ECB rate cut on June 5, but have priced in only one additional reduction over the rest of the year, according to Reuters. This, in turn, might weigh on the Euro against the GBP in the near term.