EURJPY Euro vs Japanese Yen

The British pound strengthened against other major currencies in the European session on Wednesday, after U.K. consumer price inflation accelerated more than expected in October, lowering the chances of a rate cut at the upcoming monetary policy meeting in December.

Markets expect the hot U.K. inflation figures could diminish the odds of the BoE delivering another interest-rate cut in December.

Data from the Office for National Statistics showed that the consumer price index rose 2.3 percent on a yearly basis, following September's 1.7 percent increase, which was the lowest since April 2021.

The rate again exceeded the Bank of England's 2 percent target and also remained above economists' forecast of 2.2 percent.

Core inflation that strips out prices of energy, food, alcohol and tobacco, edged up unexpectedly to 3.3 percent from 3.2 percent in September. The core rate was seen at 3.1 percent.

At the November meeting, the Bank of England had reduced its benchmark rate for the second time this year citing continued progress in disinflation but suggested that further easing is set to be gradual due to the upward impact on inflation from the Autumn budget.

On a monthly basis, the CPI climbed 0.6 percent after remaining unchanged in September.

Another data from the statistical office showed that input prices fell 2.3 percent on a yearly basis in October, down from a revised drop of 1.9 percent in September.

Monthly input prices gained only 0.1 percent in October, reversing September's revised fall of 0.5 percent. Prices were expected to climb 0.5 percent.

Factory gate prices were down 0.8 percent in October compared to a revised fall of 0.6 percent a month ago.

Monthly output prices were flat in October after posting a revised decline of 0.4 percent in September. Economists had forecast a 0.1 percent fall.

European stock markets recovered a bit after posting sharp losses in the previous session. Despite persisting concerns about Russia - Ukraine conflict, investors are picking up stocks, focusing on earnings and other corporate news, in addition to assessing the regional economic outlook.

On the geopolitical front, the U.S. Embassy in Kyiv said it would stay closed Wednesday after receiving a warning of a potentially significant Russian air attack on the Ukrainian capital.

The precautionary step came after Russian officials promised a response to President Joe Biden's decision to let Ukraine strike targets on Russian soil with U.S.-made missiles — a move that angered the Kremlin.

The Greek and Spanish embassies in Kyiv have closed to the public today, after air raid sirens were activated in the Ukrainian capital several times overnight.

In the European trading now, the pound rose to a 6-day high of 1.2715 against the U.S. dollar, from an early low of 1.2673. On the upside, 1.29 is seen as the next resistance level for the pound.

Against the euro, the Swiss franc and the yen, the pound advanced to 5-day highs of 0.8327, 197.80 and 1.1240 from early lows of 0.8360, 196.24 and 1.1193, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.82 against the euro, 200.00 against the yen and 1.13 against the franc.

Looking ahead, U.S. mortgage approvals data and U.S. EIA crude oil data are due to be released in the New York session.

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