Little Net Change Around UK CPI

EUR/GBP retraces from knee-jerk highs seen in the wake of the UK CPI release.

• Rate moved to GBP0.8559, before pulling back towards pre-release levels, last GBP0.8544.
• As noted elsewhere, Y/Y UK services CPI data met the MPC’s forecast, while the headline reading printing 0.1ppt below BBG median and BoE expectations.
• The focus on sticky elevated services inflation will have limited any GBP weakness/dovish repricing in STIRs (~70bp of ’24 BoE cuts priced vs. ~66bp yesterday).
• Softer-than-expected German PPI data was also seen, but had little impact on the wider EUR.
• Technically, EUR/GBP remains in consolidation mode.
• Moving average studies remain in a bear-mode position, with sights on key support at GBP0.8493, the Aug 23 low. The Mar 8 low at GBP0.8504 provides some protection.
• A break of the former would signal scope for a move towards GBP0.8454, a Fibonacci retracement.
• For bulls, key resistance is at GBP0.8578, the Feb 20 high. A breach of this level would highlight a range break out and a reversal.
• The ECB watchers conference and tomorrow’s BoE decision will be eyed over the next 24 hours or so.