EUR/GBP advances on Wednesday, trading near 0.8570 and reaching a two-week high as the Euro gains against a weaker Pound. The pair has broken above its recent trading range following several consecutive bullish candles on the 4-hour chart.

The move came after July inflation data from the UK and Eurozone. UK headline CPI increased 2.9% year-on-year, accelerating from 2.6% in June and matching expectations. Core CPI remained at 2.6%, slightly above the 2.5% forecast. However, services inflation, an important measure for the Bank of England, eased to 3.4% from 3.6%. The slowdown reduced expectations for aggressive BoE tightening and limited Sterling’s reaction to the inflation report.

Meanwhile, final Eurozone figures confirmed headline inflation at 2.9% in July, unchanged from the previous month and still significantly above the European Central Bank’s 2% target. The result matched expectations and allowed the Euro to maintain its strength against the Pound.

Broader market conditions are also influencing the cross. Global bond yields have climbed sharply this week amid persistent inflation concerns and fiscal uncertainty. Long-term German and UK government bond yields remain elevated, while US Treasury yields retreated slightly on Wednesday as investors positioned themselves ahead of the Federal Reserve’s FOMC Minutes.

The minutes could provide important clues about the debate within the Fed, particularly after reports indicated that three policymakers favored a rate hike at the latest meeting. A hawkish tone could support the US Dollar and influence broader market risk sentiment, while a less aggressive message may ease pressure on risk assets.

For EUR/GBP, Sterling’s reaction to UK inflation remains the key driver, while continued strength above the recent range could keep the technical bias tilted higher.

Trade idea: EUR/GBP may extend gains above 0.8570; traders could consider buying dips toward 0.8540, targeting 0.8600 if Sterling remains under pressure.