EUR/GBP Fundamental Forecast – May 24, 2016

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Published: May 23, 2016, 10:43 UTC

The EUR/GBP dipped 13 points as the euro weakened after lackluster PMI data today and the pound held its own against a strong US dollar. The pair is

EUR/GBP Fundamental Forecast – May 24, 2016

The EUR/GBP dipped 13 points as the euro weakened after lackluster PMI data today and the pound held its own against a strong US dollar. The pair is trading at 0.7711. The focus of the impact of Brexit has shifted away from just how it might affect the UK to how it might actually affect the rest of the EU. Apart from the damage it might inflict on their own trade prospects as well as the standing of the EU in the world if one of its most powerful members left, there is the rising fear of a “domino effect” in which other members would seek to do the same.

Confirmation of this has come from an Ipsos-MORI poll of 6,000 people in the EU, showing that 45% would like to have their own referendum on whether to stay in the EU. Even more damaging are answers showing that 48% of Italians, 41% of the French and 39% of Swedes would vote to leave if they were given the chance.

These results will drive home the risks to the future of the EU posed by the Brexit referendum and the added uncertainties for the single currency itself as the summer months wear on.

Markit’s flash Eurozone composite purchasing managers’ index slipped to a 16-month low of 52.9 in May from 53.0 in April, missing expectations for a reading of 53.2. The services PMI was unchanged at 53.1, undershooting forecasts of 53.3. Meanwhile, the manufacturing PMI dipped to a three-month low of 51.5 from 51.7 in April, missing estimates of 51.9.

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.

Upcoming Economic Events that you should be monitoring:

Tuesday, May 24, 2016

Cur.	Event	Actual	Forecast	Previous
USD	FOMC Member Harker Speaks
AUD	RBA Governor Stevens Speaks
EUR	ZEW Economic Sentiment		23.4	21.5
EUR	Eurogroup Meetings
USD	New Home Sales (MoM) (Apr)		2.0%	-1.5%
USD	New Home Sales (Apr)		523K	511K