EUR/GBP Fundamental Forecast – September 5, 2016

The EUR/GBP is flat at 0.8428 with the euro dipping a bit while the pound is a bit stronger after a positive construction PMI report. Most traders are sidelined ahead of the US jobs report but this pair is just uneventful. The pound surged more than a cent against the dollar yesterday as a key survey showed Britain’s manufacturers staged their sharpest rebound on record in August. Combined with today’s better than expected construction results the pound is in the green.

The closely watched Markit/CIPS manufacturing survey, which measures activity in factories, jumped from a 41-month low of 48.3 in July immediately following the referendum vote to a 10-month high of 53.3 in August.  The five-points leap in the index is the highest recorded in Markit’s 25 years of measuring the state of the UK’s manufacturing industry.

“The plunge in sterling is boosting the UK’s competitiveness, which is helping to support export orders, while the aggressive stimulus from the Bank of England and the smooth transition of political leadership has also helped calm immediate fears for the economy.”

Paul Hollingsworth, economist at Capital Economics, said the figures should be taken “with a pinch of salt, as it could well be an overreaction the other way” following July’s sharp drop in manufacturing activity.

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Upcoming Economic Events that you should be monitoring:

 September 5, 2016

Government Bond Auctions

Date Time Country Auction

Sep 06 11:00 Austria Holds bond auction

Sep 06 11:30 UK 1.5% 2026 Gilt

Sep 06 11:30 Germany Holds I/L bond auction

Sep 07 10:30 Denmark Holds bond auction

Sep 07 11:03 Sweden Holds bond auction

Sep 07 11:30 Germany Eur 5bn 0% Aug 2026 Bund

Sep 08 11:00 Ireland Holds bond auction

Sep 08 17:20 Italy Announces details of bond auction