European Rates: Euro and UK inflation markets summer update

• Euro area core inflation may slip to 2.1% in August and stay there in September, with pressure likely coming later in the fourth quarter from wages and goods inflation.
• Headline inflation in the Euro area is forecasted to fall to 1.8% in the fourth quarter of 2025, with core inflation at 2.1% and further declines expected by the end of 2026.
• UK headline inflation is expected to rise to 4% CPI in September before moderating, with front end UK inflation breakevens declining but offering value at these levels.

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