EUR/GBP Fundamental Analysis – August 24, 2015 – Forecast

Analysis and Recommendations:

The EUR/GBP gained 35 points as the euro continued to strengthen after manufacturing and services PMI data showed a significant reverse in the Eurozone economy.  There was no relevant data in the UK today as the pound continued to drift after lackluster data earlier in the week.

Although the euro has held up relatively well over the past few months as worries over Greece and China have kept risk appetite subdued, most major banks still expect it to end the year significantly lower, as ultra-loose monetary policy in the euro zone diverges with tighter US policy.

“Even if the Fed waits a couple of months, they’re still going to be miles ahead of the European Central Bank, so the story still stands,” said DZ Bank currency analyst Sonja Marten in Frankfurt.

Sterling fell against the dollar and euro after data showed British retail sales rose by less than expected in July, keeping pressure off the Bank of England to raise interest rates.

Investors reckon the BoE will start hiking rates from their historic lows in early 2016 as the UK economy continues to pick up speed. That expectation carried the pound to a 7 1/2-year high on a trade-weighted basis earlier in the week . But the latest data suggests there should be no hurry.

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 up to the data analysis and information in our weekly reports.

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Monday, August 24, 2015