This paper is dedicated to the powered two-wheeled vehicle (PTWV) lateral dynamics estimation. Differently from common unknown input observer (UIO) approaches reported in the literature, which considers constant output matrix and exact premise variables, this work takes into account the real measurement provided in the body-fixed frame. This consideration leads to a nonlinear parameter-dependent output equation with unmeasurable premise variables in the UIO design. The observer convergence and stability study are established by considering a quadratic Lyapunov function associated with the Input to State Stability (ISS) to guaranty boundedness of the state estimation errors. Sufficient conditions are given in terms of linear matrix inequalities (LMIs). Finally, the performances and applicability of the proposed approach are evaluated by co-simulation using BikeSim© high-fidelity motorcycle simulator.