EUR/GBP Monthly Fundamental Forecast July 2012

Outlook and Recommendation

The EUR/GBP  closed the month at 0.8062 after a month of roller coaster rides as both currencies suffered from the risk aversion, safe haven mode of the markets and both currencies were hit by negative eco data throughout the month.

The euro (EUR) failed to rally in June, instead trading within a relatively tight range, as authorities continued to make progress. However, hurdles on both the European growth and structural fronts remain and repeated bouts of market uncertainty are likely to recur into 2013. The fundamentals for the United Kingdom are typically associated with a weakening currency; however, the combination of the country’s triple-A status, well defined fiscal plan and its role as an inter-European diversification investment compensate for some of the negatives, thus improving the GBP outlook. The largest threat to the European complex of currencies is further disappointment on global growth, particularly European.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthlyanalysis 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 Name: Bank of England

Date of next meeting or last meeting: Jul 05

Current Rate: 0.50 % (- 0.50) at the time of this writing the BoE met and held rates.

Statement highlights of last meeting:The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.  The Committee also voted to continue with its program me of asset purchases totaling £325 billion financed by the issuance of central bank reserves. The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009.  A programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009.  The previous change in the size of that programme was an increase of £50 billion to a total of £325 billion on 9 February 2012.

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