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

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.

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

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

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