EUR/GBP Fundamental Forecast – September 14, 2016

The EUR/GBP gained 81 points as the pound got hit with weak inflation numbers and the euro was a bit weaker after a lackluster ZEW report. The pair is trading at 0.8505. Inflation in the U.K. remained unexpectedly unchanged at 0.6 percent in August, though signs of import price pressure are emerging following the sharp drop in sterling after the Brexit referendum result. The pound fell against the U.S. dollar following the data release. German investor confidence remained unchanged at 0.5 for September, according to a report from the ZEW Center for European Economic Research in Mannheim – a disappointment for economists surveyed by Bloomberg who had been expecting an improvement to 2.5.

One of the most important changes across Europe is the growing likelihood that the anti-immigrant, anti-euro Alternative for Germany (AfD) will enter the German National Parliament after next autumn’s general election.

UK Consumer price inflation failed to budge in August remaining at 0.6 per cent, the same as the previous month’s figure. Today’s figure comes despite producer input prices rising 7.6 per cent in the same month, up from 4.3 per cent in July.

Upward pressure in today’s inflation figure came from air fares and petrol prices, while bread, cereals and meat also provided some upward impact.

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Upcoming Economic Events that you should be monitoring:

 September 14, 2016

Government Bond Auctions

Date Time Country Auction

Sep 13 11:00 Netherlands Eur 2-3bn 0% Jan 2022 DSL

Sep 13 11:10 Italy Holds bond auction

Sep 14 11:05 Norway Holds bond auction

Sep 14 11:30 UK 0.125% 2046 I/L Gilt

Sep 14 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

Sep 15 10:30 Spain Holds bond auction

Sep 15 11:03 Sweden Holds I/L bond auction

Sep 15 11:50 France Holds bond auction