Forex - EUR/GBP hits 5-month high as euro zone CPI accelerates

Forex Pros – The euro surged to a five-month high against the pound on Thursday, after data showing that the inflation rate in the euro zone jumped to a 29-month high in March strengthened the case for the European Central Bank to raise interest rates next week.

EUR/GBP hit 0.8836 during European morning trade, the pair’s highest since October 26; the pair subsequently consolidated at 0.8828, gaining 0.43%.

The pair was likely to find support at 0.8752, Wednesday’s low and resistance at 0.8882, the high of October 26.

Earlier in the day, Eurostat said a preliminary estimate showed that the annual rate of consumer price inflation jumped to 2.6% from 2.4% in February, the highest level since October 2008 when the rate was 3.2%.

Analysts had expected euro zone CPI to remain unchanged in March.

Meanwhile, official data showed that the number of German people out of work fell to the lowest level since June 1992 in March, lowering the unemployment rate to 7.1% from 7.3% the previous month.

The euro was also higher against the U.S. dollar, with EUR/USD rising 0.60% to hit 1.4212.

Also Thursday, Nationwide Building Society said U.K. house prices rose unexpectedly for a second consecutive month in March, while the Bank of England’s quarterly credit conditions survey showed that credit conditions look set to ease slightly in the next three months.