EUR/GBP Weekly Fundamental Analysis – Week of May 23, 2016

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Published: May 21, 2016, 07:30 GMT+00:00

The EUR/GBP closed this week at 0.7724 falling by 1.89% as the pound gained this week and the euro dipped on fears of recession and Greek debt was once

EUR/GBP Weekly Fundamental Analysis – Week of May 23, 2016

The EUR/GBP closed this week at 0.7724 falling by 1.89% as the pound gained this week and the euro dipped on fears of recession and Greek debt was once again a market factor. Sterling soared to a 3 1/2-month high against a trade-weighted basket of currencies on Thursday, bolstered by a robust retail sales report for April and which diminished chances of an interest rate cut that some investors are factoring in.

Retail sales increased 1.3 percent in April from a month ago, beating forecasts of a 0.5 percent rise, and gaining 4.3 percent on an annual basis.

The pound gained on Wednesday after an Ipsos-Mori poll showed 55 percent of those surveyed supported staying in the European Union and just 37 percent wanted to leave. Earlier, a YouGov poll had showed the “In” camp with a four-point lead.

Betting odds on Thursday indicated the highest chance to date of Britain voting to stay in the European Union, with the implied probability of a vote for membership rising to as high as 83 percent. William Hill cut its odds an “In” vote to 1/5, the lowest level to date and indicating an implied probability of 83 percent, a spokesman said.

Sterling-watchers were expecting Base Rate to be heading higher last Christmas following BoE Governor Mark Carney’s prediction last Summer that UK interest rates would be heading Northwards ‘around the turn of the year’. However, the intervening period has seen the British economy slip into deflation and the Old Lady of Threadneedle Street change its tune to such an extent that recent commentary has hinted that an interest rate cut might now be on the cards.

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:


	Cur.	Event	Actual	Forecast	Previous
Monday, May 23, 2016
		Canada – Victoria Day
Tuesday, May 24, 2016
	USD	New Home Sales (Apr)		523K	511K
Wednesday, May 25, 2016
	CAD	Interest Rate Decision		0.50%	0.50%
	USD	Crude Oil Inventories			1.310M
Thursday, May 26, 2016
	GBP	GDP (QoQ) (Q1)		0.4%	0.4%
	GBP	GDP (YoY) (Q1)		2.1%	2.1%
	USD	Core Durable Goods Orders (MoM) (Apr)		0.3%	-0.2%
	USD	Pending Home Sales (MoM) (Apr)		0.6%	1.4%
Friday, May 27, 2016
	USD	GDP (QoQ) (Q1)		0.9%	0.5%