Key Moments
- EUR/GBP recovered toward the 0.8500 area after touching a 13-month low at 0.8455.
- A Reuters poll showed 70% of respondents expect the ECB to deliver a 25-basis-point rate hike in September following a July pause.
- The pair remains on course for a fourth straight weekly decline, with the Euro down about 2.20% against the Pound since mid-June.
Euro Recovers From Multi-Month Lows
The Euro (EUR) strengthened against the British Pound (GBP) on Friday, with EUR/GBP climbing back toward the 0.8500 region after hitting a 13-month trough at 0.8455. The move higher unfolded amid renewed speculation that the European Central Bank (ECB) will raise interest rates in the coming months.
Despite Friday’s rebound, the cross remains under pressure on a weekly basis. EUR/GBP is still heading for its fourth consecutive weekly loss, having declined approximately 2.20% since mid-June.
ECB Outlook and Eurozone Inflation Dynamics
The single currency found support from a reduction in risk aversion on Friday and from growing expectations that the ECB could tighten policy further in September. According to a Reuters survey published on Thursday, 70% of participants projected a quarter-point rate increase in September, following an anticipated pause at the ECB’s July meeting.
Recent remarks from ECB officials this week have reinforced that scenario, with many policymakers underscoring persistent inflation concerns and signaling that they are prepared to lift rates again if warranted.
Market focus later on Friday is on the final reading of the Eurozone Harmonized Index of Consumer Prices (HICP) for June. The data are expected to confirm that inflation slowed to 2.8% from 3.2% in the prior month. These figures, however, were compiled before the closure of the Strait of Hormuz and the latest rise in crude oil prices.
Sterling Supported by UK Fiscal and Policy Expectations
The British Pound has advanced over recent weeks, even as the United Kingdom contends with a political deadlock. Investor confidence that the next government will adhere to Chancellor Reeves’ fiscal framework has underpinned GBP performance.
Additional support for the Pound earlier in the week came from speculation that the Bank of England (BoE) might opt for another interest rate hike before the end of the year, further enhancing the currency’s appeal against the Euro.
Eurozone Inflation Indicators: HICP and Core HICP
Two key Eurostat inflation releases remain in focus for Euro watchers: the Harmonized Index of Consumer Prices (HICP) and the Core HICP, which excludes the most volatile components.
| Indicator | Description | Next Release | Frequency | Consensus | Previous | Source |
|---|---|---|---|---|---|---|
| Core Harmonized Index of Consumer Prices (MoM) | The Core HICP tracks monthly price changes for a standardized basket of goods and services in the European Monetary Union, excluding food, energy, alcohol, and tobacco. It is compiled by Eurostat using a harmonized methodology across member states and is widely monitored as a gauge of underlying inflation and shifts in purchasing behavior. A higher reading is generally interpreted as supportive for the Euro, while a lower reading is typically seen as negative. | Fri Jul 17, 2026 09:00 | Monthly | – | 0.2% | Eurostat |
| Harmonized Index of Consumer Prices (YoY) | The HICP captures annual price changes for a representative basket of goods and services across the European Monetary Union. Using a consistent methodology and weighting scheme across member countries, it compares prices in the reference month with those from the same month a year earlier. Higher readings are typically viewed as bullish for the Euro, while lower outcomes are seen as bearish. | Fri Jul 17, 2026 09:00 | Monthly | 2.8% | 2.8% | Eurostat |
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