3 Aug 2015
EUR/GBP: a big week from the UK this week
FXStreet (Guatemala) - EUR/GBP is currently trading at 0.7023 with a high of 0.7042 and a low of 0.7011.
EUR/GBP is back to a stable platform for the time being, trading in a sideways fashion after a number of weeks of high volatility around the global market place. The Greek saga continues but attentions are else where, focussing on the Fed and US data in the main, with eyes on the BoE this week also.
A framework bailout plan four Greece has been agreed with its European Union partners in exchange for the tight reforms and the budget austerity. However, we are some way off implementation of the deal and markets remain concerned about political and economic stability in the EZ. Prime minister, Alexis Tsipras, may need to call a snap election as well which keeps an air of uncertainty. Meanwhile, Greece reopened the Athens stock exchange where the main stock index fell to the worst ever one-day performance after only a few minutes of trading.
Sterling's big week
Across to the UK, this week is a big week for the nation and for sterling, with a possible bid on a hawkish sounding Carney. The main focus will be the BoE's August Inflation Report on Thursday 6th of August. Analysts at TD Securities explained that Carney's message will be (1) a hike in 2015 is possible, but not likely, (2) a hike in early 2016 is reasonable, (3) while tightening will be slow and gradual, it may need to be slightly faster than the market is priced for in order to manage inflation risks for 2017/18, which would be seen increasingly on the upside. "So, we think Carney will be hawkish by steepening up the curve more than talking up a 2015 hike."
We also had the UK's manufacturing PMIs today (51.9 vs 51.6 exp/pre) and there are the services PMI's to come this Wednesday, which, despite a strong pound, may follow the better than expected manufacturing outcome earlier today, supporting continued demand for Sterling. We then have Industrial production on Thursday. Analysts at TD Securities explained, "After declines of 0.6% m/m in May and 0.4% in April, consensus expects only a 0.2% rebound in June. There still seems to be a small downside risk to this." But given the strong manufacturing, there could be an uptick surprise here as well. Germany releases its own IP on Friday. As usual, the factory orders data released the day before will help refine the forecast here.
EUR/GBP bears lurking below 0.7200
Technically, the outlook is bearish while trading below 0.7196. We already visited the base of the 6-year down channel and it is likely that within in a strong pound environment that a further test of the 0.6937/67 level could give opening up the 0.6571/41 and 2007 lows.
EUR/GBP is back to a stable platform for the time being, trading in a sideways fashion after a number of weeks of high volatility around the global market place. The Greek saga continues but attentions are else where, focussing on the Fed and US data in the main, with eyes on the BoE this week also.
A framework bailout plan four Greece has been agreed with its European Union partners in exchange for the tight reforms and the budget austerity. However, we are some way off implementation of the deal and markets remain concerned about political and economic stability in the EZ. Prime minister, Alexis Tsipras, may need to call a snap election as well which keeps an air of uncertainty. Meanwhile, Greece reopened the Athens stock exchange where the main stock index fell to the worst ever one-day performance after only a few minutes of trading.
Sterling's big week
Across to the UK, this week is a big week for the nation and for sterling, with a possible bid on a hawkish sounding Carney. The main focus will be the BoE's August Inflation Report on Thursday 6th of August. Analysts at TD Securities explained that Carney's message will be (1) a hike in 2015 is possible, but not likely, (2) a hike in early 2016 is reasonable, (3) while tightening will be slow and gradual, it may need to be slightly faster than the market is priced for in order to manage inflation risks for 2017/18, which would be seen increasingly on the upside. "So, we think Carney will be hawkish by steepening up the curve more than talking up a 2015 hike."
We also had the UK's manufacturing PMIs today (51.9 vs 51.6 exp/pre) and there are the services PMI's to come this Wednesday, which, despite a strong pound, may follow the better than expected manufacturing outcome earlier today, supporting continued demand for Sterling. We then have Industrial production on Thursday. Analysts at TD Securities explained, "After declines of 0.6% m/m in May and 0.4% in April, consensus expects only a 0.2% rebound in June. There still seems to be a small downside risk to this." But given the strong manufacturing, there could be an uptick surprise here as well. Germany releases its own IP on Friday. As usual, the factory orders data released the day before will help refine the forecast here.
EUR/GBP bears lurking below 0.7200
Technically, the outlook is bearish while trading below 0.7196. We already visited the base of the 6-year down channel and it is likely that within in a strong pound environment that a further test of the 0.6937/67 level could give opening up the 0.6571/41 and 2007 lows.