Analysis and Recommendations (EUR/GBP Forecast):
The EUR/GBP eased by 5 points to trade at 0.7227 as both currencies eased a bit as the US dollar strengthened. Sterling rose to its highest in nearly six months against a weaker dollar on Thursday, buoyed by comments from Bank of England chief Mark Carney who said it was possible interest rates would be higher in a year’s time.
Asked in a BBC radio interview if interest rates were likely to be higher by this time next year, Carney said: “It’s possible, but it depends on the evolution of the economy.’’
He also said recent EUR/GBP strength could be a bit of a dampener to growth, echoing comments made on Wednesday when he said a strong currency would have a role to play in setting monetary policy.
The UK economy has outpaced much of Europe over the past two years, and the prospect that Britain will be the first to follow any rise in US rates has underpinned sterling.
The euro weakened slightly after European Central Bank President Mario Draghi said that the ECB’s vast stimulus efforts will remain in place “as long as needed” until officials are confident they will meet their inflation objective on a sustained basis. The ECB’s bond-buying program has sent the euro sharply lower since it was first announced in January.
Commerzbank said in a note that the downgrades to productivity forecasts indicate the BoE will not be comfortable with the currency’s appreciation over the longer term. “Indeed, if the forecasts manifest then further sterling appreciation would not be justified at all. We remain of the view that euro/sterling will trade at lower levels over the medium term more so as a function of euro weakness,’’ they said.
ForexTraq provides in-depth analysis for each currency and commodity we review in forex trading. 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 for EUR/GBP in our weekly reports.
Today’s economic releases actual vs. forecast:
|JPY||BoJ Governor Kuroda Speaks|
|CHF||PPI (MoM) (Apr)||-2.1%||-0.1%||0.2%|
|USD||NY Empire State Manufacturing||5.00||-1.19|
|USD||Industrial Production (MoM)||0.1%||-0.6%|
Upcoming Economic Events that you should be monitoring for GBP/USD in forex trading:
Monday, May 18, 2015
|AUD||RBA Assist Gov Lowe Speaks|
|JPY||Industrial Production (MoM)||-0.3%|
|JPY||Tertiary Industry Activity Index||0.3%|
|CHF||Retail Sales (YoY) (Mar)||-2.7%|
Government Bond Auctions
Date Time Country
May 18 09:30 Germany Eur 1.5bn 12M (May 2016) Bubills
May 18 10:00 Belgium Auctions OLOs
May 20 09:03 Sweden Holds bond auction
May 21 08:30 Spain Auctions Bonos
May 21 09:03 Sweden Holds bond exchange auction
May 21 09:10 France Auctions BTANs
May 21 09:30 UK Auctions 4.75% 2030 Conventional Gilt
May 21 10:10 France Auctions
May 21 15:30 Italy Announces details of CTZ/BTPei on 26 May
May 21 15:00 US Announces details of 2-year FRN on 27 May, plus 2/5/7 year
May 21 17:00 US Auctions 10-year TIPs
May 22 09:03 Sweden Holds bond exchange auction
May 22 10:00 Norway Details bond auction on 27 May
EUR/GBP analysis forecast
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