EUR/GBP very much on the radar this morning and here is why

As noted in the previous update, the Pound is very much in focus soon this morning, when the UK release the September monthly CPI and RPI inflation reports. That brings the Pound versus the Euro very much to the centre of the stage, as well as the GBP/USD. The reason being two-fold. First the calls for the ECB to cut by more than 0.25% tomorrow have gotten a lot louder most recently and second, if the UK inflation data does not fall back as much as is expected, the prospect of a UK rate cut could be dampened. So, what do the markets expect from that inflation data this morning? UK Consumer Prices (CPI) are widely forecast to fall back last month. The annualised rate of CPI is anticipated to drop below the 2% forecast range, at 1.9%. It stood at 2.2% in August. Annualised Retail prices (RPI) are also expected to fall, to 3.1%, from 3.5% previously. So, depending on what emerges here the EUR/GBP could move sharply. Yesterday the cross fell back to a low at 0.8325 and later closed at 0.8331. Looking at the chart it seems a move either side of 0.8300 and 0.8400 could extend and this data today has the potential to deliver such an extension. The range seen so far today has been covered by 0.8328 to 0.8334. It is right now on that session low