EUR/GBP Fundamental Analysis May 20, 2014 Forecast

Analysis and Recommendations:

The EUR/GBP added 8 points as the euro recovered slightly on positive comments from German Banker Weidman otherwise it is a quiet market day with no news or data. The pair is trading at 0.8155. European Central Bank policymakers will watch the euro’s exchange rate closely before taking policy decisions, ECB policymaker Jens Weidmann said on Monday.

While stressing that the ECB does not have a foreign exchange rate target, Weidmann noted that the euro’s value can affect price developments in the single currency bloc. Weidmann, the chief of Germany’s Bundesbank, also said a period of low inflation was likely to persist for some time.

“With monetary policy decisions, the European Central Governing Council will therefore watch further exchange rate developments very closely,” Weidmann said in the text of a speech for delivery at a finance conference in Frankfurt. Sterling registered a 0.4 cent daily gain against the Euro on Friday as investors grew jittery over the prospect of holding Greek bonds. The yields on the Hellenic nation’s 10-year sovereign debt rose from 6.83% to 6.92% before the weekend as traders reacted to news that the Greek government is planning to impose a capital gains tax on some holders of Greek debt.

The single currency was also hurt by fears that the governments of some Eurozone countries – Spain, Portugal and Greece in particular – are losing the support of voters. With unemployment still catastrophically high in the periphery it is possible that ruling parties could lose the votes of discontented citizens in this month’s upcoming European elections.

If political legitimacy is lost then parties could be persuaded to change tack and hold back on structural reforms in order to appease voters. This could be seen by investors as a step in the wrong direction and could easily weigh on demand for the single currency.

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.

Economic Data May 19, 2014 actual v. forecast

 

Upcoming Economic Events that affect the EUR, GBP and USD

Government Bond Auction

Date Time Country 

May 20 00:30 Japan

May 20 08:30 Spain

May 21 09:03 Sweden

May 21 09:30 Germany

May 21 09:30 Portugal

May 22 08:30 Spain

May 22 09:03 Sweden 

May 22 15:30 Italy

May 23 15:30 Italy