EUR/GBP attracts some buyers above 0.8250 after UK CPI inflation data

• EUR/GBP gathers strength to around 0.8275 in Wednesday’s early European session, adding 0.27% on the day. 
• The UK annual CPI jumped 2.6% in November vs. 2.6% expected. 
• ECB President Christine Lagarde hinted at potential rate cuts as inflation risks ease. 

The EUR/GBP cross holds positive ground near 0.8275, snapping the two-day losing streak during the early European session on Wednesday. The Pound Sterling (GBP) weakens after the UK November Consumer Price Index (CPI) inflation data. Later on Wednesday, traders will keep an eye on the Eurozone Harmonized Index of Consumer Prices (HICP) report. 

Data released by the Office for National Statistics (ONS) on Wednesday showed that the UK CPI rose by 2.6% YoY in November, compared to a 2.3% growth seen in October. The reading was in line with the market consensus of 2.6% and stayed well above the Bank of England’s (BoE) 2.0% target. 

Meanwhile, the Core CPI, excluding volatile food and energy items, climbed by 3.5% YoY in November versus a 3.3% increase in October, missing the estimation of 3.6%. On a monthly basis, the UK CPI inflation eased to 0.1% in November from 0.6% in October. The markets expect a 0.1% print in the reported month. The UK inflation report failed to boost the GBP and acts as a tailwind for EUR/GBP. 

The European Central Bank (ECB) lowered its key rates last week for the fourth time this year and signaled for further rate cuts as inflation risks ease. During the press conference, the ECB President Christine Lagarde said, “The direction of travel is clear, and we expect to lower interest rates further.” The dovish remarks from the ECB policymakers might weigh on the Euro (EUR) against the GBP. Furthermore, the concerns about the weak economy and uncertainty about potential tariffs in the US could contribute to the shared currency’s downside.