EUR/GBP Weekly Fundamental Analysis – March 14-18, 2016 -Forecast

Weekly Analysis and Recommendations

The EUR/GBP is trading at 0.7752 as both the pound and the euro gained this week. The weak US dollar and stimulus from the ECB kept the currencies volatile. Fears about a British exit from the EU and persistent concerns about the global economy have boosted the yen, a safe-haven currency that so far this year has gained 5.4 percent against the dollar.

Alvin Tan, a currency strategist at Société Générale, said investors appeared to be satisfied with the scope of the ECB’s easing measures, which helped drive the improvement in risk sentiment along with the stronger yuan and higher oil. The euro regained its footing against the dollar after ECB Governing Council member Erkki Liikanen said the central bank had not run out of tools to boost the economy and would continue to support it until it reaches its inflation target of almost 2 percent.

The move by the central banks sparked a risk-on mood for investors that helped commodity-based currencies at the expense of the dollar, said Tempus currency strategist Juan Perez.

U.K. Chancellor of the Exchequer George Osborne is sticking to his guns.

Tripped up by an economy proving weaker than forecast and with lower tax revenues as a result, Osborne is set to use his budget on March 16 to deliver even more austerity to meet a legally binding pledge of a fiscal surplus by the end of the decade.

Such rectitude will leave the Bank of England with the task of driving demand and marks a split from peers increasingly turning to fiscal stimulus to support their economies.

“His focus on austerity does set him apart from the European governments, but it is his trademark. He’s staked his own reputation on it,” Liz Martins, an economist at HSBC Holdings Plc in London, said in an interview. “If we do get a new wave of cuts, that could hurt growth, and potentially we do need rates to stay low.”

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.

Major Economic Events for the week:

Upcoming Government Bond Auctions

Date Time Country

Mar 16 11:03 Sweden Holds bond auction

Mar 16 11:30 Germany Eur 4bn 0.5% Feb 2026 Bund

Mar 17 10:30 Spain Holds bond auction

Mar 17 11:50 France Holds bond auction

Mar 17 19:00 US Holds 10-year TIPS auction