EUR/GBP Fundamental Analysis October 16, 2014 Forecast

Analysis and Recommendations:

The EUR/GBP eased by 15 points to trade at 0.7945 as the pound recovered after UK unemployment fell unexpectedly. The euro continued to fall as the eurozone looks headed towards a recession. UK unemployment fell by 154,000 in the three months to the end of August to 1.97 million, the first time it has been below two million since 2008, official figures show. The drop took the unemployment rate to 6%, its lowest level since late 2008. The employment rate is now 73%, close to its all-time high of 73.2%, the Office for National Statistics said. Over the year, the number of unemployed people fell by 538,000, the largest annual fall since records began.

ECB President Mario Draghi will have more opportunities to convince markets of the ECB’s resolve when he delivers remarks at two different conferences Wednesday. Germany’s widely watched ZEW investor confidence index fell in October for a 10th consecutive month, hitting its lowest level since November 2012. Berlin later in the day cut its economic growth forecasts to 1.2 percent for this year and 1.3 percent in 2015, from previous forecasts of 1.8 percent and 2.0 percent, respectively.

The worsening outlook for German growth adds to concerns about the 18-member eurozone, which some analysts say is threatened with recession and is already holding back a global recovery.

“The German economy is losing traction very quickly and there is a real prospect that it could contract again in (the third quarter) after the 0.2 percent fall in the second quarter,” National Australia Bank said in a note.

Adding to the gloom, industrial output in the eurozone fell 1.8 percent in August, according to data published Tuesday, reversing the previous month’s gain that had stoked hopes of a fragile recovery.

Attention will now turn to speeches later in the day by European Central Bank chief Mario Draghi, after the recent announcement of further monetary easing measures to prop up the economy.

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.

Today’s economic releases actual vs. forecast:

 

Upcoming Economic Events that you should be monitoring:

Government Bond Auction

Date Time Country Auction

Oct 14 08:30 Spain 6 & 12M T-bill auction

Oct 14 09:30 Belgium 3 & 12M T-bill auction (Jan & Oct 2015)

Oct 15 09:03 Sweden Bond auction

Oct 15 09:30 Germany Eur 4.0bn Sep 2016 Schatz auction

Oct 16 08:30 Spain Bono/Obligacion auction

Oct 16 09:30 UK Auctions 0.125% 2024 I/L Gilt

Oct 16 15:00 US Announces details of 30Y TIPS auction on Oct 23