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EUR/GBP recovers over 0.850 on to hawkish ECB wagers
The EUR/GBP exchange rate has surpassed 0.850 as investors support the common currency ahead of the ECB meeting. The European Central Bank may raise interest rates for the first time in eleven years. The total inflation rate in the United Kingdom has increased to 9.4 percent, while the core CPI has decreased by 10 basis points to 5.8 percent.
After testing the earlier inventory distribution region, which is located in a narrow range of 0.8475 to 0.8495 with reduced selling pressure, the EUR/GBP pair has risen steadily. The cross is seeking to rise over 0.8500 as investors support the shared currency bulls in anticipation of a European Central Bank rate hike announcement (ECB).
President Christine Lagarde of the European Central Bank is likely to raise interest rates for the first time in eleven years. As pricing pressures in Europe have exceeded the households' tolerance capacity and the Asset Purchase Program (APP) has completed, the ECB must increase interest rates. Initially, the ECB may want to test the waters with a modest rate hike before implementing a larger rate increase in the future.
In the meanwhile, the situation surrounding the gas supply from Nord Stream 1 to Europe has become murky as a result of Russian President Vladimir Putin's remarks that it remains to be seen in what condition the Nord Stream 1 equipment will return from maintenance.
On the front of the pound, price pressures have remained on the high side, as unpredictable oil and food costs have pushed up prices. However, the core Consumer Price Index (CPI) has demonstrated signs of weariness. The total inflation rate came in at 9.4 percent, above forecasts of 9.3 percent and the most recent reading of 9.1 percent. While the core CPI stayed in line with expectations at 5.8 percent, it decreased from the previous reading of 5.9 percent.
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