EUR/GBP Fundamental Analysis March 29, 2012, Forecast

By FXEmpire.com

Analysis and Recommendations:

The pair EUR/GBP is currently exchanging at 0.8384 as the pound crumbled today on a series of negative reports in the UK. Both the UK Current Account and GDP fell short of expectations.

The British economy contracted 0.3% in the final three months of 2011 compared to the previous quarter, the U.K. Office for National Statistics reported Wednesday. The ONS had previously estimated a 0.2% quarterly contraction.

The UK’s current account deficit narrowed in Q4 following a sharp downward revision to the shortfall in the previous quarter, figures from National Statistics revealed Wednesday. The current account deficit narrowed to GBP8.451 billion in Q4 from GBP10.515 billion in Q3, in line with the median forecast. Revisions to UK investment abroad data meant that the Q3 shortfall was revised lower from an initially estimated GBP15.226 billion figure.

The euro did not find much support today, as investors became weary in regard to the growing debt crisis in Spain.

The risk of a Spanish debt restructuring is higher now than it’s been since the beginning of the crisis, said Citigroup Inc. chief economist William Buiter in a research comment published today. “Spain looks likely to enter some form of a troika program this year, as a condition for further European Central Bank support for the Spanish sovereign and/or Spanish banks,” said the former Bank of England Monetary Policy Committee member. A week ago, Buiter told Bloomberg TV that he was increasingly worried about a default for Spain.

Italian Prime Minister Mario Monti reportedly said that there was little euro-zone contagion risk from Spain’s deficit worries, and that that country is on a “steady course of budget consolidation.”

Economic Data March 28, 2012 actual v. forecast

EUR	French GDP (QoQ)	0.2%	0.2%	0.2%
EUR	M3 Money Supply (YoY)	2.8%	2.5%	2.5%
EUR	Private Loans (YoY)	0.7%	1.3%	1.1%
EUR	Italian Business Confidence	92.1	91.7	91.7
GBP	Business Investment (QoQ)	-3.3%	-5.4%	-5.6%
GBP	Current Account	-8.5B	-8.4B	-10.5B
GBP	GDP (QoQ)	-0.3%	-0.2%	-0.2%
EUR	Italian 6-Month BOT Auction	1.12%	1.20%
USD	MBA Mortgage Applications	-2.7%	-7.4%
EUR	German CPI (MoM)	0.3%	0.3%	0.7%
USD	Core Durable Goods Orders (MoM)	1.6%	1.5%	-3.0%
USD	Durable Goods Orders (MoM)	2.2%	3.0%	-3.6%
USD	Crude Oil Inventories	7.1M	2.5M	-1.2M
USD	Gasoline Inventories	-3.5M	-1.7M	-1.2M

Economic Reports for March 29, 2012 Europe and Americas

08:55 EUR German Unemployment Rate 6.8% 6.8%

The German unemployment rate measures the percentage of the total work force that is unemployed and actively seeking employment during the reported month.

08:55 EUR German Unemployment Change -10K 0K

German Unemployment Change measures the change in the number of unemployed people during the previous month.

13:30 USD Initial Jobless Claims 350K 348K

13:30 USD Continuing Jobless Claims 3365K 3352K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

13:30 USD GDP Price Index (QoQ) 0.9% 0.9%

The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product. It is the broadest inflationary indicator.

13:30 USD GDP (QoQ) 3.0% 3.0%

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

17:45 USD Fed Chairman Bernanke Speaks

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to speak. As head of the Fed, which controls short term interest rates, he has more influence over the U.S. dollar’s value than any other person. Traders closely watch his speeches as they are often used to drop hints regarding future monetary policy.

Government Bond Auctions (this week)

Mar 29 00:30 Japan Auctions 2Y JGBs

Mar 29 09:10 Italy BTP/CCTeu auction

Mar 29 17:00 US Usd 29.0bn 7Y Notes

Mar 30 14:30 UK Publication of the DMO Q2 Gilt operations calendar

Mar 31 n/a Spain IGCP deadline for Q2 T-bill issuance programme

Apr 03 09:30 Belgium Auctions 3 & 6M T-bills

Apr 03 09:30 UK Conventional Gilt Auction

Apr 04 08:30 Spain Bono auction

Apr 04 14:30 Sweden Details T-bill auction on Apr 11

Apr 05 08:50 France OAT auction

Apr 05 15:00 US Announces auctions

Apr 05 15:30 Italy Details BOT on Apr 11 & BTP/CCTeu on Apr 12

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Originally posted here