Pound-to-Euro Hits One-Year High After Eurozone Inflation Miss

GBP/EUR had already been pushing higher since August, when the eurozone economy showed signs of a sharper slowdown. The pair broke above the €1.1600 resistance level last week and held it before the inflation data. A close above €1.1635 opens the path toward €1.1700, the next area on the charts, according to a London-based currency strategist at a regional bank. On the downside, the 200-day moving average near €1.1480 marks the first support.

The euro's weakness extended across the board. The common currency fell 0.3% against the dollar to $1.0480. Against the yen, it slid to the lowest since early September. The moves reflected a broad reassessment of the ECB's ability to keep tightening as the eurozone economy loses momentum, the strategist said.

For traders tracking the pound, the next key input is UK GDP data due at the end of the week. A strong reading would reinforce the case for the Bank of England to hold rates higher for longer, supporting sterling. A miss would test the euro's resilience but is unlikely to reverse the broader trend, the strategist said.

The pound held near the day's highs into the close, with thin liquidity ahead of the ECB decision Thursday. For context on the dollar side of the pound's moves, see the GBP/USD profile.