EUR/GBP Fundamental Analysis October 17, 2014 Forecast

Analysis and Recommendations:

The EUR/GBP battled to the finish today with the pound winning as the pair fell 43 points to trade at 0.7971. European leaders are in the midst of strained relations with France and Italy. Both countries are likely to fall foul of the EU’s budget constraints as they overspend rather than use austerity to control their budgets. Italian Prime Minister Matteo Renzi has prepared a budget which provides €18 billion of tax cuts in order to try to stimulate some sort of growth. Neither France nor Italy will get anywhere near the 3% budget deficit limit in the next few years and that will bring them into conflict with the EU commission. 

Expectations that the Bank of England will be the first major central bank to raise rates drove sterling to a six-year peak against the dollar in July. But with UK wages showing little signs of rising, the housing market cooling and economic activity moderating, the prospect of an end-of-year slowdown in the UK has grown.

BoE Governor Mark Carney displayed a slightly more dovish stance on Monday, saying the monetary policy committee will have to take into account “a more modest global recovery, particularly if that’s the case in Europe” and “a benign global inflationary environment.” Investors are also wary about political risks in Britain that might have a bearing on investment flows and the pound.

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 20 12:00 Belgium OLO Auction

Oct 20 12:00 Slovakia Bond auction (for decision)

Oct 21 10:30 Spain 3 & 9M T-bill auction

Oct 21 11:00 Norway Bond auction

Oct 21 11:00 UK Auctions 2.75% 2024 Gilt

Oct 22 11:30 Germany Eur 2.0bn Aug 2046 Bund auction

Oct 23 11:03 Sweden I/L bond auction

Oct 23 17:00 US Announces 2/5/7Y Note & 2Y FRN auctions on Oct 28/29/30 & 29

Oct 23 17:30 Italy Announces details of BTPei/CTZ auctions on Oct 28

Oct 23 19:00 US 30Y TIPS auction

Oct 24 17:30 Italy Announces details of BOT auction on Oct 29