EUR/GBP approaches 0.8660 support area again, weighed by strong UK inflation data

• Euro upside attempts remain limited on Wednesday, with the Pound buoyed by strong UK inflation.
• UK inflation posted its largest Y-o-Y increase in a year and a half, putting July's rate cut into question.
• EUR/GBP maintains its broader bullish trend intact while above 0.8660.
  

The Euro recovery attempts against the British Pound have been capped at 1.1680 during Wednesday's European session, and the pair has pulled back to levels near the 0.8660 with the Pound buoyed by strong UK inflation figures.

The broader trend, however, remains positive. The common currency continues to trade in a sequence of higher highs and higher lows, 3.8% above late-May's lows, and with downside attempts limited above a previous resistance, at the mentioned 0.8660.

Strong UK inflation puts BoE cuts in danger

Data from the UK revealed that consumer inflation accelerated to a 0.3% monthly rate and 3.6% year-on-year in June, beating expectations of 0.2% and 3.4% respective increases and posting the strongest yearly inflation since January 2024.The core inflation, more relevant from the BoE monetary policy perspective, rose 3.7% from June last year, against market expectations of a 3.5% reading, unchanged from the previous month.

Likewise, retail prices grew 0.4% on the month and 4.4% yearly, above the 0.3% and the 4.3% respective readings anticipated by market analysts. These figures cast some doubt about a widely expected BoE rate cut after this month's meeting and have provided some support to the British Pound.

The Euro, on the contrary, remains on its back foot on Wednesday, weighed by the lack of progress in the EU-US trade talks. Eurozone data released earlier today revealed that Italian CPI remains below the ECB's 2% target, and a larger-than-expected trade surplus has failed to give any significant boost to the Euro.