EUR/GBP Fundamental Analysis August 23, 2013 Forecast

Analysis and Recommendations:

The EUR/GBP  gained 23 pips to trade at 0.8551 after stronger data helped give the euro a lift. Sterling lost ground against the euro, which was helped by a better-than-expected euro zone Purchasing Managers’ Index survey . The common currency was up 0.4 percent against the pound at 85.68 pence, well above its 1-1/2 month low of 85.05 pence struck last week. “The Fed minutes have given a fillip to the dollar,” said John Hardy, currency strategist at Saxo Bank. “We expect sterling/dollar’s upside to hold at around $1.57/1.58 since the BoE could increase its rhetoric and express concerns about the recent rise in market interest rates.”

Earlier this month, Carney pledged to keep UK interest rates low until unemployment falls to 7 percent, which the central bank sees as unlikely for another three years. Improving economic conditions have cast doubt on that timetable and helped sterling gain 2.5 percent against the dollar and around 2 percent against the euro so far this month. The currency has tracked a broad rise in bond yields and market interest rates, with sterling overnight inter-bank average rates pricing in a rate hike in early 2015.

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Economic Data August 22, 2013 actual v. forecast

 

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