EUR/GBP Fundamental Forecast – April 28, 2016

The EUR/GBP is recovering nicely after an early session setback. The inability to break through yesterday’s low helped encourage the short-covering that turned the market around. Fundamentally better-than-expected economic data in Germany and weaker-than-expected GDP data from the U.K. was the catalyst behind the rebound rally.

A closely watched survey showed German consumer confidence is on the rise, indicating there is an expectation Europe’s largest economy will regain momentum in the coming months as increased employment, income growth and moderate inflation help domestic demand.

The GfK research group said Wednesday its forward-looking consumer climate index rose to 9.7 points for May, up from 9.4 points in April and above economists’ expectations it would remain flat.

GfK said the index figure was buoyed by an increase in income expectations to a nine-month high amid a strong labor market, and also increases in economic expectations and in consumers’ propensity to buy.

GfK said consumers believe “domestic demand will continue to be the essential pillar of the German economy.”

Britain’s economy slowed sharply in the first three months of 2016 as factors unrelated to the looming in/out EU referendum put a brake on growth.

The Office for National Statistics (ONS) said there was no evidence for or against a “Brexit effect” on gross domestic product (GDP) as it reported that output had expanded by 0.4% in the first quarter – down from 0.6% in the final three months of 2015.

The government’s decision to hold a referendum was not taken until late February, and business groups cited the impact of weaker global trade and the new year turbulence in the financial markets as more likely explanations for the softness in growth.

The upside momentum is strong enough to suggest the rally is likely to continue all day so we have to give today’s session to the bullish traders. The downtrend could resume after a few days as investors continue to increase bets the ECB will implement additional stimulus measures and polls will continue to show an increasing number of Brits in favor of remaining a member of the European Union.

FxEmpire provides in-depth analysis for each asset 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 up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

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Thursday, April 28, 2016

Government Bond Auctions

Date Time       Country           Auction

Apr 27 11:03 Sweden Holds bond auction

Apr 27 11:10 Italy Holds CTZ auction

Apr 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Apr 27 19:00 US 2-year FRN, 5-year note auctions

Apr 28 11:10 Italy Holds 5yr/10yr bond auctions

Apr 28 19:00 US Holds 7-year note auction