Eur/gbp Rises After Uk Inflation Data Surprises to the Upside

The EUR/GBP exchange rate increased following the release of UK inflation data for April. The data significantly exceeded both consensus estimates and the Bank of England's (BoE) projections. Analysts at Danske Bank reported this development, highlighting its impact on market sentiment. Headline inflation reached 3.5% year-on-year, surpassing the expected 3.3% and the previous 2.6%. Services inflation also climbed to 5.4% year-on-year, exceeding forecasts of 4.8%. These figures suggest a more cautious approach to rate cuts by the BoE, with persistent stagflationary trends and elevated price pressures negatively impacting the GBP. Several factors contributed to the higher inflation figures, including the annual indexation of services like phone and internet bills. Energy price effects, increased water bills, a new car tax, and the timing of Easter further complicated the BoE's assessment of underlying price pressures.