Although recent Italian struggles were expected to have an impact on EUR, the currency did trade higher than the weakened GBP in the week. The issues surrounding Italy involve the rejection of Italy’s recent budget submission, which could have resulted in a revolt. Concerns surrounding the Italian budget were downplayed by European Central Bank President Mario Draghi during a recent monetary policy meeting, The Euro was supported by a prediction of higher inflation in 2018. Which points towards a rise in interest rates.
Brexit Caused the Most Damage to GBP
Much of the damage to pound sterling has been due to the news that the British government was preparing for a no-deal Brexit. This isn’t the first time that news surrounding Brexit has impacted the currency, and until the final talks have taken place, there’s likely to be more fluctuation.
Although talks are nearing completion, there is still a lot of uncertainty, especially given the preparations being made. It could be argued that these measures were being taken to ensure safeguards are in place, but given the number of changes reported so far, it should come as no surprise that there are many opinions related to GBP’s rates.
GBP-EUR Could Make Gains
Upcoming economic events meant that there is a lot of potentials for gains to be made during the week. Those trading in GBP will want to keep track of is the Autumn Budget announcement as well as the upcoming consumer confidence and the meeting with Bank of England on Thursday.
There is also PMI readings expected, but it is thought that most of the fluctuation within the pairing will have occurred by then.
Euro traders will see the release of German unemployment and inflation data, as well as gross domestic product and confidence data.
Analysts have stated that they expect readings to show a decline, but the unemployment figures could be more positive.
The Outcome of GBP Uncertain
The predictions for GBP during the week are a mixed bag. There is potential for pound sterling to trade higher, but this can only be done by Bank of England increasing interest rates in 2019.
However, others predict that BoE could be resistant, as there is still uncertainty in relation to the outcome, which could contribute to further losses. A decrease in PMI readings could also have ramifications on GBP.