EUR/GBP attracts some sellers below 0.8650 after hotter UK CPI inflation data

• EUR/GBP weakens to around 0.8620 in Wednesday's early European session. 
• UK CPI inflation rose to 3.8% YoY in July from 3.6% in June. 
• Analysts expect the ECB to hold interest rates steady at its September meeting. 

The EUR/GBP cross loses traction to near 0.8620 during the early European session on Wednesday. The Pound Sterling (GBP) edges higher against the Euro (EUR) after the UK Consumer Price Index (CPI) inflation report. Traders will keep an eye on the European Central Bank's (ECB) President Christine Lagarde speech later on Wednesday.

Data released by the United Kingdom's Office for National Statistics on Wednesday showed that the country's headline CPI rose 3.8% YoY in July, compared to an increase of 3.6% in June. This reading came in above the market consensus of 3.7%. The Core CPI, which excludes the volatile prices of food and energy, climbed 3.8% YoY in July versus 3.7% prior, hotter than the expectation of 3.7%. 

Meanwhile, the monthly UK CPI inflation eased to 0.1% in July from 0.3% in June. Markets projected a decline of 0.1%. The Pound Sterling attracts some buyers in an immediate reaction to the hotter UK CPI inflation data.

Traders will take more cues from the ECB's Lagarde speech, as it might offer some hints about the interest rate path. According to Reuters, the ECB is expected to hold interest rates at 2.00% in the September meeting, as the Eurozone's economic outlook is broadly unchanged after the European Union (EU) agreed to a trade deal with the United States (US). 

On Thursday, the preliminary reading of the Purchasing Managers' Index (PMI) for August will take center stage. If the data show a stronger-than-expected outcome, this could boost the shared currency against the GBP in the near term.