EUR/GBP Monthly Fundamental Forecast – July 2016

The EUR/GBP was a balancing act as both currencies declined but the pound outpaced the euro after the Brexit surprise vote. The pair ended the month at 0.8334 up almost 8% for the month and seeing an increase of more than 13% for the year. UK and EU politicians have given very different accounts of how the UK’s Brexit negotiations should proceed.

The EU’s Trade Commissioner, Cecilia Malmstrom, says the UK cannot begin negotiating trade terms with the bloc until after it has left.

“First you exit then you negotiate,” she told BBC Newsnight.

But the BBC understands other EU Commission officials privately believe it is “inconceivable” that trade talks would not start before the UK’s exit.

Fallout from Brexit and questions over migration into the EU will dominate Slovakia’s six-month presidency of the EU, its prime minister has said.

Robert Fico said Slovakia had its own agenda for its presidency, but admitted the UK’s vote to leave the EU would exert “considerable influence”.

Slovakia assumes the EU’s rotating presidency for the first time later on Friday.

But it comes as the bloc faces intense pressure over the UK’s referendum.

Slovakia’s program for the six months was adopted only yesterday, Mr Fico said, owing to a desire to take into account the fallout from Brexit.

Mr Fico made the comments alongside European Commission president Jean-Claude Juncker at a press conference.

Shadow Chancellor John McDonnell has called for Labour MPs to “calm down” and work together for the good of their party.

He told the World at One’s Mark Mardell that the internal squabbles within the Labour Party “are irrelevant” and that MPs “seem to have been plotting this coup rather than thinking about the interests of the party or the country”.

There is no sign of anybody triggering Article 50 to begin the UK’s process of leaving the European Union.

There are political reasons for that, but there is concern that the delays will hit foreign investment, which is a problem for the current account.

It’s not very fashionable to care about the current account, but there are particular reasons to be looking at it now.

Our forecast for July 2016  0.8375-0.8175

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.