Snapshot: EUR/GBP is grinding higher as the dramatic downshift in UK Core CPI to 2.5% and rising unemployment at 5% test the Bank of England’s cautious hold at 4.50%. This domestic softening anchors the cross, with today’s immediate direction dictated by the ECB’s Philip Lane speaking on the Eurozone outlook at 13:10 BST.
- The primary signal remains the narrowing Gilt-Bund yield spread as UK inflation expectations slide, weakening the BoE’s high-for-longer narrative.
- For the NY session, monitor whether US 10-year yields holding at 4.48% prompt broader greenback demand, which historically dampens Euro-cross momentum on the margins.
Bias into NY: We are buyers of EUR/GBP dips targeting 0.8560, expecting the structural unwind of hawkish BoE pricing to outweigh ECB easing expectations ahead of the New York open.