EUR/GBP downside derailed as UK markets price earlier BOE cut

The pound is still struggling following the release of lower than forecast UK CPI and RPI a little earlier this morning. That is impacting all the major GBP pairings too. The GBP/JPY has been kicked lower, as just noted in the previous update and the GBP/USD seems at risk of an interim break below 1.2629. At the same time, this weaker than expected UK inflation has dented the downside for the EUR/GBP and that cross is now lifting to fresh interim highs, above 0.8660. The outlook for UK interest rates to be lower next year has now been bought forward and the money markets are now pricing more than 130bp of cuts for next year and bringing forward the timing of the first cut to May. This is hurting the pound as much as it is driving the FTSE 100 in the opposite direction and now the FTSE 100 futures are priced to open more than 100 points above where the index closed yesterday. The pound has no friends right now this morning, as the EUR/GBP rises to session highs right now, currently at 0.8664