Euro Trims Losses Against Pound After Hot German Inflation Data

The euro initially weakened against the British pound midweek, pressured by a flight to safety as geopolitical frictions in the Middle East escalated. The risk-averse environment pushed EUR/GBP to fresh intraday lows.

However, the pair quickly trimmed its losses after German inflation data came in higher than forecast. The hot print revived expectations of a more hawkish European Central Bank stance, providing support to the single currency.

The recovery was enough to partially offset the earlier risk-off drag, leaving EUR/GBP well off its worst levels as traders reassessed the inflation outlook.