EUR/GBP climbs past 0.8700 as Eurozone inflation figures exceed expectations

EUR/GBP Remains Firm as Eurozone Inflation Surprises to the Upside

The EUR/GBP pair is trading steadily around 0.8710 in early European hours on Wednesday. The Euro is gaining ground against the Pound Sterling (GBP) after inflation figures from the Eurozone exceeded expectations. Investors are now turning their attention to the upcoming Eurozone Retail Sales data, which is set to be published on Thursday.

According to a preliminary report from Eurostat released on Tuesday, the Harmonized Index of Consumer Prices (HICP) in the Eurozone increased by 1.9% year-on-year in February, up from January’s 1.7%. The core HICP, which strips out volatile items such as food, energy, alcohol, and tobacco, rose by 2.4% over the same period—surpassing both the previous reading and market forecasts of 2.2%.

The European Central Bank (ECB) has maintained its deposit rate at 2.0% since June 2025. While no changes to monetary policy are anticipated at the March meeting, rising energy costs have prompted traders to assign a 50% probability to a rate hike later this year. This shift in expectations could provide further support for the Euro against the Pound in the near future.

Escalating oil and gas prices, driven by ongoing tensions in the Middle East, have reignited concerns about inflation. As a result, market participants have reduced their expectations for additional easing by the Bank of England (BoE). Alan Taylor, a member of the BoE’s Monetary Policy Committee (MPC), commented on Monday that it is premature to determine how higher oil prices will affect inflation and economic growth in the UK, though the central bank continues to monitor the situation closely.

Bloomberg reports that the likelihood of a BoE rate cut this month has dropped sharply—from around 80% last week to under 20% now.