EUR/GBP Monthly Fundamental Forecast April 2013

Outlook and Recommendation

The EUR/GBP  closed the month well below its high ending March at 0.8440 after hitting a high of 0.9794. The euro tumbled on a new economic crisis stemming from Cyprus and threatening the eurozone banking system. The recent OECD report showed that the eurozone was still falling behind the world in its recovery which is now delayed until 2014. The GBP was able to climb after hitting a bottom after the Chancellors budget statement and poor eco data.

Government spending will contribute nothing to GDP growth this year, following a boost of roughly 0.6 percentage point in 2012. Though inflation is still elevated, ticking up from 2.7% y/y to 2.8% in February, there remains a possibility that the Bank of England could add to its asset purchase program (i.e., quantitative easing) at some point this year, and/or employ alternative measures to stimulate economic activity. The UK is expected to lose its triple-A sovereign credit rating from S&P and Fitch (following last month’s downgrade by Moody’s), but the market reaction should be muted.

Traders will be closely watching the twin central bank meetings in the beginning of the month to see what each bank has in store to help the economy recover.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Central Bank – BOE and ECB

Central Bank Name – The Bank of England

Date of next meeting or last meeting: April 04, 2013

Current Rate: 0.50%

Central Bank Name –European Central Bank

Date of next meeting or last meeting: April 04, 2013

Current Rate: 0.75%

Economic events for the month of April affecting EUR, CHF, GBP and USD