EUR/GBP Monthly Fundamental Forecast August 2012

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Outlook and Recommendation

The EUR/GBP is trading at 0.7846 to close the month, after the euro fell after the July 9th meeting of the Eurogroup produced now results as promised by the EuroFin Summit on June 29th. We do not foresee an imminent EUR collapse, yet we expect EURUSD to trend gradually lower. Meanwhile, it is highly probable that the ECB will resume a more active bond purchase programme in line with practices observed both in the US and the UK. As for the GBP, the fundamental backdrop has deteriorated with slower growth dynamics and aggressive central bank policy; therefore, GBPUSD has dampened, but we expect the GBP to outperform the EUR.

Highest: 0.8077

Lowest: 0.7758

Difference: 0.0319

Average: 0.7875

Change %: -2.15

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.

Central Bank Name: Bank of England

Date of next meeting or last meeting: Aug 02 (on August 2nd the bank held rates and policy )

Current Rate: 0.50 % at the time of this writing the BoE met and held rates.

Statement highlights of last meeting: The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.  The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £50 billion to a total of £375 billion. The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009.  A programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009.  The previous change in the size of that programme was an increase of £50 billion to a total of £325 billion on 9 February 2012.

Economic events for the month of August affecting EUR, CHF and GBP

Date

Time

Currency

Event 

Forecast

Previous

Aug 1

8:30

GBP

Manufacturing PMI

48.7

48.6

Aug 2

7:15

CHF

Retail Sales y/y

3.6%

6.2%

 

8:30

GBP

Construction PMI

48.3

48.2

 

11:00

GBP

Asset Purchase Facility

375B

375B

 

11:00

GBP

Official Bank Rate

0.50%

0.50%

 

11:45

EUR

Minimum Bid Rate

0.75%

0.75%

 

12:30

EUR

ECB Press Conference

   

Aug 3

8:30

GBP

Services PMI

51.7

51.3

Aug 7

7:00

CHF

Foreign Currency Reserves

 

364.9B

 

7:15

CHF

CPI m/m

 

-0.3%

 

8:30

GBP

Manufacturing Production m/m

 

1.2%

Aug 8

9:30

GBP

BOE Inflation Report

   

Aug 10

8:30

GBP

PPI Input m/m

 

-2.2%

Aug 14

8:30

GBP

CPI y/y

   
 

9:00

EUR

German ZEW Economic Sentiment

   

Aug 15

8:30

GBP

Claimant Count Change

   
 

8:30

GBP

MPC Meeting Minutes

   
 

9:30

GBP

BOE Gov King Speaks

   

Aug 16

8:30

GBP

Public Sector Net Borrowing

   
 

8:30

GBP

Retail Sales m/m

   

Aug 22

8:00

EUR

German Ifo Business Climate

   

Aug 23

7:30

EUR

German Flash Manufacturing PMI

   
 

8:30

GBP

Revised GDP q/q

 

-0.7%

 

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About: FX Empire Analyst - Barry Norman

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