EUR/GBP Weekly Fundamental Analysis October 1-5, 2012 Forecast

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Introduction: The cross tends to move in ranges, with relatively clear barriers. The narrower ranges made it somewhat harder, but it seems to return to wider ranges. The GBP is does not seem to move in response to the EUR as directly currently. The UK austerity program vs. The EU debt crisis seems to have them moving in opposing distances. They are developing new trading personalities and there is a good deal of profit to be made trading this pair. They can be volatile.

  • The interest rate differential between the European Bank(ECB) and the Bank of England(BoE)
  • European and UK economic data
  • Growth differentials between the Euro zone and UK

Weekly Analysis and Recommendations

The EUR/GBP is trading at 0.7956 as it closes the week as the euro weakened throughout the week on positive data in the UK and worries about the EU debt crisis with Spain and Greece remaining unresolved and a thorn in everyone’s side.

Date

Last

Open

High

Low

Change %

Sep 28, 2012

0.7956

0.7955

0.7995

0.7948

0.01%

Sep 27, 2012

0.7955

0.7962

0.7965

0.7924

-0.09%

Sep 26, 2012

0.7962

0.7966

0.7970

0.7940

-0.05%

Sep 25, 2012

0.7966

0.7976

0.7986

0.7936

-0.13%

Sep 24, 2012

0.7976

0.7990

0.7996

0.7955

-0.16%

 

The key focus this week will be on the UK PMI surveys for September. In August these surveys made a surprise jump higher and all eyes will be on whether they can sustain these gains at the end of the third quarter. The market expects the manufacturing sector survey to remain in contraction territory at 49.0, however, it expects the services sector survey, which is more important for the UK economy, to retreat slightly to 53.0 from 53.7 in August, but this is still some of the highest levels since May and suggests that the economy could have bounced back in 3Q after an upward revision to 2Q’s GDP figure to -0.4% from the initial reading of -0.5%.

Recent data has been fairly mixed with stronger industrial production and employment data, and weak retail sales for August. Thus, it is fairly hard to predict the PMI’s this month. In the past the pound has benefited from positive economic surprises 

The Bank of England also meets next week, but no change to asset purchases or rates is expected, as we wait for the BOE to conclude its latest round of asset purchases next month.

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.

Major Economic Events for the week of September 24-28, 2012 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

Event

Actual

Forecast

Previous

Sep. 24 

EUR

German Ifo Business Climate Index 

101.4

102.5

102.3

 

EUR

German Current Assessment 

110.3

111.0

111.1

 

EUR

German Business Expectations 

93.2

95.0

94.2

Sep. 25

EUR

GfK German Consumer Climate 

5.9

5.9

5.9

 

GBP

BBA Mortgage Approvals 

30.5K

28.6K

28.8K

 

USD

CB Consumer Confidence 

70.3

63.0

61.3

 Sep. 26

EUR

German 10-Year Bund Auction 

1.520%

 

1.420%

 

GBP

CBI Distributive Trades Survey 

6

5

-3

 

EUR

German CPI (MoM) 

0.0%

0.0%

0.4%

 

EUR

German CPI (YoY) 

2.0%

2.0%

2.1%

 

USD

New Home Sales 

373K

380K

374K

 Sep. 27

EUR

German Unemployment Change 

9K

10K

11K

 

GBP

Business Investment (QoQ) 

0.9%

-1.5%

-1.5%

 

GBP

Current Account 

-20.8B

-12.4B

-15.4B

 

GBP

GDP (QoQ) 

-0.4%

-0.5%

-0.5%

 

GBP

GDP (YoY) 

-0.5%

-0.5%

-0.5%

 

EUR

Italian 10-Year BTP Auction 

5.24%

 

5.82%

 

USD

Core Durable Goods Orders (MoM) 

-1.6%

0.3%

-1.3%

 

USD

Durable Goods Orders (MoM) 

-13.2%

-5.0%

3.3%

 

USD

Initial Jobless Claims 

359K

378K

385K

 

USD

GDP (QoQ) 

1.3%

1.7%

1.7%

 

USD

Continuing Jobless Claims 

3271K

3285K

3275K

 

USD

Pending Home Sales (MoM) 

-2.6%

-0.7%

2.6%

 Sep. 28

EUR

French GDP (QoQ) 

0.0%

0.0%

0.0%

 

EUR

French Consumer Spending (MoM) 

0.4%

-0.1%

0.4%

 

CHF

KOF Leading Indicators 

1.67

1.57

1.59

 

EUR

CPI (YoY) 

2.7%

2.4%

2.6%

 

USD

Core PCE Price Index (MoM) 

0.1%

0.1%

0.1%

 

USD

Personal Spending (MoM) 

0.5%

0.5%

0.4%

 

USD

Chicago PMI 

49.7

53.0

53.0

 

USD

Michigan Consumer Sentiment 

78.3

79.0

79.2

Historical: From 2010 to Present

Highest: 0.9150 EUR on March 01, 2010.

Average: 1.1548 EUR over this period.

Lowest: 0.7758 EUR on July 22, 2012

 

Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD

Date

Time

Currency

Event

Forecast

Previous

Oct. 01 

08:15

CHF

Retail Sales (YoY) 

5.0% 

3.2% 

 

08:30

CHF

SVME PMI 

47.0 

46.7 

 

15:00

USD

ISM Manufacturing Index 

49.8 

49.6 

Oct. 02 

07:00

GBP

Nationwide HPI (MoM) 

0.2% 

1.3% 

Oct. 03 

10:00

EUR

Retail Sales (MoM) 

-0.2% 

-0.2% 

Oct. 04

12:00

GBP

Interest Rate Decision 

0.50% 

0.50% 

 

12:00

GBP

BOE QE Total 

375B 

375B 

 

12:45

EUR

Interest Rate Decision 

0.75% 

0.75% 

Oct. 05

11:00

EUR

German Factory Orders (MoM) 

-0.7% 

0.5% 

Government Bond Auction

Date Time Country 

Oct 01 10:00 Norway 

Oct 02 09:15 Austria 

Oct 02 09:30 Belgium 

Oct 02 09:30 UK 

Oct 02 14:30 UK 

Oct 03 09:10 Sweden 

Oct 03 10:00 Norway 

Oct 04 08:30 Spain 

Oct 04 08:50 France 

Oct 04 15:00 US 

Oct 05 15:30 Italy 

 

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