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EUR/GBP Weekly Fundamental Analysis – January 25-29, 2016 -Forecast

By:
Barry Norman
Published: Jan 23, 2016, 09:03 UTC

Weekly Analysis and Recommendations The EUR/GBP will open the week at 0.7566 seeing a loss of 1.19% as the euro declined after the ECB comments and

EUR/GBP Weekly Fundamental Analysis – January 25-29, 2016 -Forecast

eurgbp weekly bns
Weekly Analysis and Recommendations

The EUR/GBP will open the week at 0.7566 seeing a loss of 1.19% as the euro declined after the ECB comments and lackluster manufacturing data. The UK also saw poor data releases with retail sales missing expectations by a large margin.   European Central Bank president Mario Draghi is still able to push through his agenda and will not allow himself to be dissuaded from pursuing further policy stimulus, one of the world’s most influential brokers said.

In an about-face, analysts at Goldman Sachs said they were wrong to believe the ECB’s ‘reaction-function’ had changed at its 3 December policy meeting; more specifically, Draghi’s ability to push through necessary easing. Instead of focusing on global inflation trends, investors should keep in mind that in order to meet the ECB’s projection for a “modest” rise of 1.3% in ‘core’ HICP inflation, month-on-month core HICP would need to double versus its pace last year.

The British Pound continued to weaken against the USD but hold up relatively better against the EUR. Slightly weaker than expected UK growth and persistently low inflation implies the Bank of England is under no immediate pressure to tighten monetary policy, however. The “Brexit” issue remains a significant downside risk for the pound in 2016. HSBC The London-based bank said that political concerns surrounding the referendum on Britain’s membership of Europe – due by 2017 but widely expected to come at some point this year – were weighing on sterling sooner than they had expected them to.

“The UK will need to get beyond ‘Brexit’ fears before sterling can strengthen, but once it does, the rally is set to be sizeable,” the bank’s currency strategists wrote in a research note.

The bank reckons strong domestic demand will force the Bank of England to raise interest rates much sooner than markets expect – investors are currently betting that rates will stay at their record lows until 2017. That should also boost the pound.

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.

eurgbp

Major Economic Events for the week:

 

 

 

Cur.

 

Event

Actual

Forecast

Previous

 

 

Monday, January 25, 2016

 

  EUR

 

German Ifo Business Climate Index

 

108.4

108.7

 

 

Tuesday, January 26, 2016

 

 

Holiday

Australia – Australia Day

 

  USD

 

CB Consumer Confidence (Jan)

 

96.5

96.5

 

 

Wednesday, January 27, 2016

 

  AUD

 

CPI (QoQ) (Q4)

 

0.3%

0.5%

 

 

 

  USD

 

New Home Sales (Dec)

 

500K

490K

 

 

 

  USD

 

Crude Oil Inventories

 

 

3.979M

 

 

Thursday, January 28, 2016

 

  NZD

 

Interest Rate Decision

 

 

2.50%

 

 

 

  GBP

 

GDP (YoY) (Q4)

 

1.9%

2.1%

 

 

 

  GBP

 

GDP (QoQ) (Q4)

 

0.5%

0.4%

 

 

 

  USD

 

Core Durable Goods Orders (MoM)

 

-0.2%

 

 

 

 

  USD

 

Pending Home Sales (MoM) (Dec)

 

0.7%

-0.9%

 

 

Friday, January 29, 2016

 

  EUR

 

CPI (YoY) (Jan)

 

0.4%

0.2%

 

 

 

  USD

 

GDP (QoQ) (Q4)

 

0.8%

2.0%

 

 

 

  CAD

 

GDP (MoM) (Nov)

 

0.2%

 

   

 

Upcoming Government Bond Auctions

Date Time Country 

Jan 25 11:30 Germany EUR 1.5bn Jan 2017 Bubill

Jan 25 13:00 Norway Details of bond auction on Jan 27

Jan 25 17:20 Italy Details of BTP/CCTeus on 28 Jan

Jan 26 11:10 Italy Holds CTZ/linker bond auction

Jan 26 n/a US Holds 2-year note auction

Jan 27 11:05 Norway Holds bond auction

Jan 27 11:30 Germany EUR 1bn 2.5% Aug 2046 Bund

Jan 27 17:20 Sweden Details of bond auction on 03 Feb

Jan 27 n/a US Holds 2-year FRN auction

Jan 27 n/a US Holds 5-year note auction

Jan 28 11:03 Sweden Holds I/L bond auction

Jan 28 11:10 Italy Holds BTP/CCTeus auction

Jan 28 n/a US Holds 7-year note auction

Feb 02 n/a UK Details of Gilt auctions on Feb 09 & 11

 

 

 

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