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• EUR/GBP stays supported as the Euro benefits from improved risk appetite, boosted by easing geopolitical tensions.
• German PPI fell more sharply than expected, highlighting ongoing deflationary pressures in April.
• In the UK, Wednesday’s core CPI for April is expected to rise 3.6% year-over-year, slightly above the previous 3.4% reading.

EUR/GBP extends its upward momentum for a second consecutive session, trading around 0.8420 during European hours on Tuesday. The currency cross remains supported as the Euro (EUR) benefits from improved risk sentiment, driven by easing geopolitical tensions and anticipation of developments on the Russia-Ukraine trade front.

US President Donald Trump held a call with Russian President Vladimir Putin on Monday, announcing that Ukraine and Russia have agreed to commence immediate negotiations for a ceasefire. Notably, the talks may proceed without direct US involvement, signaling a possible shift toward de-escalation in the conflict.

Despite these supportive developments, the Euro's upside could be limited as traders increasingly expect further monetary easing from the European Central Bank (ECB). Concerns over sluggish Eurozone growth and inflation have led markets to price in a nearly 90% probability of an ECB rate cut at the June 5 meeting, with just one additional cut anticipated for the remainder of the year, according to Reuters.

On the data front, Germany's Producer Price Index fell more sharply than expected, highlighting ongoing deflationary pressures. In April 2025, the PPI dropped 0.9% year-over-year, following a 0.2% decline in March and underperforming the forecasted 0.6% decrease. Month-over-month, the PPI fell 0.6%—its fifth consecutive monthly decline—compared to a 0.7% drop in March and worse than the anticipated 0.3% contraction.

Looking ahead, market attention is shifting to the UK’s April Consumer Price Index (CPI) report, set for release on Wednesday. The core CPI, which excludes food, energy, alcohol, and tobacco, is expected to rise by 3.6% year-over-year, slightly above the previous reading of 3.4%, potentially offering clues about the Bank of England’s (BoE) next policy move.

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