EUR/GBP: German Ifo Data, Greek Hopes Drive the Euro Higher

The Euro erased its previous losses versus the Great British pound in last Friday's European exchanges following the release of the German Ifo Business Climate report that showed an unexpected increase to 101.4 points in November, from 100 points in October. Also coming in to support to single currency was markets' optimism that this week, a Greek deal would finally be reached by the European finance ministers. In the UK, a much weaker outlook for the economy because of recent signs of deterioration, resulted to the decline of the Pound versus its peers. As the Euro is expected to gain support from rising hopes on Greece, bullish trades are projected for the EURGBP pair in today's European session.

Sentiment towards the Euro Zone recently favors the shared currency as markets are positive that the finance leaders would be able to find a way to settle their conflicts and come up with a decision over Greece's debt program and how to keep it sustainable in the future. The finance ministers are set to meet for a third time today to nail a Greek deal for the disbursement of funds to the Hellenic Republic in time for its debt repayments in December. A decision enabling Greece to receive the next tranche of bailout funds is seen to shore up the common currency versus its major peers. The rise in German business confidence is likewise expected to strengthen optimism that the currency union is enduring a slowdown of the region's economy, thereby seen to be bullish for the Euro. 

Meanwhile, the Sterling is set to drop as the UK's deteriorating economic outlook is likely to be the cause for Chancellor of the Exchequer George Osborne to extend austerity until 2018, said the Institute for Fiscal Studies (IFS). Osborne is set to deliver his Autumn Statement on December 5, with a warning from the IFS that it could bring more "fiscal pain." In a separate report by the Ernst & Young ITEM Club, "UK business investment is lagging behind global competitors and won't return to pre-recession peaks until at least 2015." With a slower recovery in business investment, UK growth is likely to stall, thereby seen to pull down the Pound versus its peers. Thus, buy is deemed a favorable position for the EURGBP pair in today’s European trades.

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