EUR/GBP is once again testing the 0.89 level, GBP/USD the 1.20. A more cautious rate outlook in the UK is set to weigh on the Pound, economists at Commerzbank report.

Soft UK inflation data

“In the UK, January inflation surprised to the downside which triggered a decline in interest rate expectations.”

“At its last meeting, the BoE had already shown itself to be more cautious with regard to further interest rate hikes. The weaker inflation figures should be just what it needs to signal an early pause in interest rates. We, therefore, see the Pound rather on the weaker side.”