19 Feb 2025

• EUR/GBP softens to around 0.8285 in Wednesday’s early European session. 
• UK CPI inflation rose to 3.0% YoY in January vs. 2.8% expected.
• The dovish stance from the ECB might drag the Euro lower.

The EUR/GBP exchange rate has declined to approximately 0.8285 during the early hours of trading in Europe on Wednesday. The Pound Sterling (GBP) has gained ground against the Euro (EUR) following the release of UK Consumer Price Index (CPI) inflation data for January, which exceeded expectations. Additionally, the Eurozone's Current Account figures are set to be published later on Wednesday.

Data from the United Kingdom’s Office for National Statistics revealed that the headline CPI increased by 3.0% year-on-year in January, up from a 2.5% rise in December, surpassing the anticipated 2.8%. The Core CPI, which excludes the more volatile food and energy prices, rose by 3.7% year-on-year in January, compared to 3.2% previously, aligning with market expectations.

Conversely, the monthly UK CPI inflation experienced a decline to -0.1% in January, down from +0.3% in December, while markets had forecasted a -0.3% figure. The Pound Sterling remained stable in response to the positive UK CPI inflation data.

The slower economic growth in the Eurozone has led to expectations of additional interest rate cuts by the European Central Bank (ECB), which may exert downward pressure on the Euro. Analysts predict that the ECB will implement quarter-point reductions at each meeting until mid-2025, potentially lowering the deposit rate to 2.0%.

Support and Resistance Levels:

Support:

0.8265  
0.8245  
0.8200  

Resistance:

0.8380  
0.8400  
0.8450 

Technical Indicators:

Moving Averages: The currency pair is currently trading beneath its 50-day and 100-day moving averages, which may indicate a potential bearish trend.

Oscillators: Indicators like the RSI and MACD point towards a neutral to bearish perspective.