EUR/USD, EUR/GBP Flows - Yields and US CPI in focus; UK GDP upside keeps cross cap holding

US CPI pretty much the only focal point today, and FX still fairly sidelined prior, EUR/USD not far from the 1.16 anchor and USD/JPY consolidating in 154-154.50 after the fast run down. 

In many ways it is slightly excessive to be giving one single, statistically variable, data print so much importance but it comes at a key point into the Fed decision and with bonds so pressured. Yesterday’s acceleration and minor overnight extension sees US10s within a couple of basis points of the big 5% reference now, with 30s up to around 10bp shy of 5 ½ %. Bund acceleration took DE10s to just through 3 ½ %. We do see upside risks to the US core number at 0.3%, albeit only after rounding, and that could inject some further volatility into the close of the week.

Some positives for the UK the only pre-event of note with Jul GDP coming in at 0.4% vs market expectations of flat in July to lift the y/y rate to 1.6%, highest since Feb25, bolstered by services. Relatively minor GBP reaction with EUR/GBP off around 15 ticks on the kneejerk. It has helped maintain the capping at 0.86 (to 0.8620) however and while that holds that keeps any potential tactical short GBP interest at bay and eventually it becomes a range top fade on the charts if it doesn't break.