EUR/GBP Weekly Fundamental Analysis June 11-15, 2012, Forecast

Introduction: The cross tends to move in ranges, with relatively clear barriers. The narrower ranges made it somewhat harder, but it seems to return to wider ranges. The GBP is does not seem to move in response to the EUR as directly currently. The UK austerity program vs. The EU debt crisis seems to have them moving in opposing distances. They are developing new trading personalities and there is a good deal of profit to be made trading this pair. They can be volatile.

  • The interest rate differential between the European Bank(ECB) and the Bank of England(BoE)
  • European and UK economic data
  • Growth differentials between the Euro zone and UK

 

Weekly Analysis and Recommendations

The EUR/GBP ended the week at 0.8091 as the euro continued trading on negative sentiment and in response to the on again off again risk aversion theme of the markets.

Date

Last

Open

High

Low

Change %

Jun 08, 2012

0.8091

0.8096

0.8098

0.8071

-0.07%

Jun 07, 2012

0.8097

0.8124

0.8131

0.8065

-0.33%

Jun 06, 2012

0.8124

0.8101

0.8124

0.8051

0.28%

Jun 05, 2012

0.8101

0.8136

0.8141

0.8088

-0.43%

Jun 04, 2012

0.8136

0.8078

0.8137

0.8067

0.72%

Both the BoE and the ECB held rates at meeting this week offering no help to the local economy or boosts to the currency.

Moody’s downgraded the credit rating of several German and Austrian banks, as the banks are not capable of absorbing the losses. In the meanwhile, we heard the Spanish treasury minister saying that the Spain is facing lot of problems in refinancing its debt and that the country will find it difficult to rescue itself from this situation. Turning towards the G-7 meeting, the ministers and the bankers in the G-7 discussed about the financial and the fiscal union in Europe with major focus being on the Spain and Greece. During all these negative sentiments, currency still rebounded. The ECB officials took a neutral stance and kept the rates unchanged at 1% and postponed the policy changes for the month of July.

For the first two days of the week, we did not see any drastic movement in the Pound as UK markets were closed, as the nation was celebrating its Diamond Jubilee. Later we saw pound reacting to the ECB meeting outcomes as the ECB officials were showing readiness to ease the crisis, thereby reducing the possible harm to the UK’s economy. UK’s construction PMI dropped during the week on account of decline in the business confidence. Country’s HPI data came in positive, which helped the currency to move higher thereby indicating improvement in the housing market conditions. Bank of England held a meeting during the week, wherein the officials decided to keep the bank rate unchanged at 0.5%. They made no changes in the stimulus program, thereby lifting the currency higher.  Now the market participants will be focusing on the minutes of the meeting, which will be published on 20th June 2012

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Major Economic Events for the week of June 4 – 8 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

 Event

Actual

Forecast

Previous

Jun 5

USD

ISM Non-Manufacturing PMI

53.7

53.6

53.5

GBP

Construction PMI

54.4

54.5

55.8

Jun 6

EUR

Minimum Bid Rate

1.00%

1.00%

1.00%

CHF

Foreign Currency Reserves

303.8B

 

237.6B

Jun 7

CHF

CPI m/m

0.0%

0.1%

0.1%

GBP

Services PMI

53.3

52.6

53.3

EUR

Spanish 10-y Bond Auction

6.04|3.3

 

5.74|2.4

GBP

Asset Purchase Facility

325B

325B

325B

GBP

Official Bank Rate

0.50%

0.50%

0.50%

USD

Unemployment Claims

377K

381K

389K

GBP

PPI Input m/m

-2.5%

-1.2%

-1.4%

Jun 8

USD

Trade Balance

-50.1B

-49.4B

-52.6B

 

Historical:

Highest: 1.2336 EUR on Jun 29, 2010.

Average: 1.1548 EUR over this period.

Lowest: 0.7950 EUR on May 16, 2012

Economic Highlights of the coming week that affect the Euro, GBP and CHF

Date

Time

Currency

 Event

Forecast

Previous

Jun 11

6:45

EUR

French Industrial Production m/m

 

-0.9%

23:01

GBP

RICS House Price Balance

 

-19%

Jun 12

5:45

CHF

SECO Economic Forecasts

   

8:30

GBP

Manufacturing Production m/m

 

0.9%

14:00

GBP

NIESR GDP Estimate

 

0.1%

Jun 13

7:15

CHF

PPI m/m

 

-0.1%

9:00

EUR

Industrial Production m/m

 

-0.3%

Jun 14

7:30

CHF

Libor Rate

<0.25%

<0.25%

7:30

CHF

SNB Monetary Policy Assessment

   

7:30

CHF

SNB Press Conference

   

8:00

CHF

SNB Financial Stability Report

   

8:00

EUR

ECB Monthly Bulletin

   

9:00

EUR

CPI y/y

 

2.4%

 

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