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EUR/GBP Weekly Fundamental Analysis – April 18-22, 2016 -Forecast

By:
Barry Norman
Published: Apr 16, 2016, 04:28 UTC

The EUR/GBP will enter a new week at 0.7944 with both currencies having an active week of trading, Both the euro and the pound are beginning to deal with

EUR/GBP Weekly Fundamental Analysis – April 18-22, 2016 -Forecast

The EUR/GBP will enter a new week at 0.7944 with both currencies having an active week of trading, Both the euro and the pound are beginning to deal with Brexit as well as other problems stemming from the European Union. Reuters said that the pound against the euro fell 0.5 percent at the end of the week to 79.79 pence.

“As per usual the devil is very much in the detail,” said Foenix Partners sales trader Tom Floyd, highlighting the prominence given to the June 23 referendum in the BoE minutes. “With rising domestic inflation and growth driving risk assets higher while sterling remains in the doldrums, a look to the polls rather than the central bank may be more useful forecasting tools for future currency moves.”

This week, data showed consumer price inflation touched a 15-month high last month of 0.5 percent, while the core inflation measure closely watched by the BoE hit 1.5 percent – its strongest since October 2014. But policymakers said they expected inflation to recede this month.

In March the minutes said that a “significant proportion” of sterling’s recent weakness, which helps lift inflation, reflected uncertainty around the referendum, and this month they added that it was therefore not clear how long this would last. The pound has lost more than 7 percent this year on a trade-weighted basis and touched a 2-1/2-year low last week, largely driven by Brexit fears.

The International Monetary Fund cut its growth forecast for the nation and warned of “severe” damage to the world economy if Brexit happens. A report yesterday showed a gauge of UK house prices unexpectedly dropped to a nine-month low in March.

“No central bank seems in the mood to rock the boat at the moment,” said Stuart Bennett, London-based head of G-10 currency strategy at Banco Santander. BOE officials “just need a little more time to be certain about inflation and growth outlook,” said Bennett, who sees the central bank raising rates “sooner than the market thinks.”

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.

EUR/GBP daily chart, April 15, 2016
EUR/GBP daily chart, April 15, 2016

Major Economic Events for the week:

 
Cur. Event Actual Forecast Previous
Monday, April 18, 2016
  NZD CPI (QoQ) (Q1)   0.1% -0.5%  
Tuesday, April 19, 2016
    EUR German ZEW Economic Sentiment (Apr)   8.0 4.3  
    USD Building Permits (Mar)   1.200M 1.177M  
Wednesday, April 20, 2016
    GBP Average Earnings Index +Bonus (Feb)   2.3% 2.1%  
    GBP Claimant Count Change (Mar)   -10.0K -18.0K  
    USD Existing Home Sales (Mar)   5.29M 5.08M  
    USD Crude Oil Inventories     6.634M  
Thursday, April 21, 2016
    GBP Retail Sales (MoM) (Mar)   -0.2% -0.4%  
    EUR Interest Rate Decision (Apr)        
    USD Philadelphia Fed Manufacturing Index   8.0 12.4  
Friday, April 22, 2016
    EUR German Manufacturing PMI (Apr)   51.0 50.7  
    CAD Core CPI (MoM) (Mar)   0.3% 0.5%  
    CAD Core Retail Sales (MoM) (Feb)   -0.5% 1.2%

Government Bond Auctions

Date Time       Country           Auction

Apr 18 11:00 Belgium Holds OLO auction

Apr 18 13:00 Norway Details of bond auction on Apr 20

Apr 20 11:05 Norway Holds bond auction

Apr 20 11:30 Germany Eur 4bn 0.5% Feb 2026 Bund

Apr 20 17:20 Italy Details of BTP€i auction

Apr 20 17:20 Sweden Details of bond auction on Apr 27

Apr 21 10:30 Spain Holds bond auction

Apr 21 11:03 Sweden Holds I/L bond auction

Apr 21 11:50 France Holds bond auction

Apr 21 19:00 US Holds 5-year TIPS auction

Apr 22 17:20 Italy Announces details bond auction

 

 

 

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