EURGBP has moved 20 ticks and some further short-term EUR gains could be seen after the much lower than expected CPI data.
GBP has fallen after the much lower than expected UK CPI figure, with the ONS indicating that it was driven by eight sub categories. The sharp decline in core CPI from 5.7% to 5.1%, will provide comfort in itself to the BOE but will also raise questions whether UK inflation is slowing more quickly than BOE assumptions. This will fuel spring rate cut talk, especially as we think that the market can discount more on UK rates.
