Pound to Euro: Bank of England in Focus in Week Ahead 

The main event in the week ahead for GBP/EUR is the meeting of the Bank of England on Thursday.

There is not expected to be any changes in policy from Threadneedle Street but there is always a risk of more easing given the continued uncertainty over Brexit.

The minutes which will follow the meeting are likely to be the object of scrutiny as markets try to read hints of a change in stance, which is currently very accommodative.

Technical Analysis of GBP/EUR

GBP/EUR has resumed its uptrend after pulling back from the highs in a classic A-B-C correction (see chart below).

This seems to suggest the uptrend has now resumed, however, GBP/EUR is approaching a ‘resistance zone’ composed of several levels bunched near each other, which it is expected the exchange rate will struggle to overcome.

Only by moving above 1.2200 can we assume that it has successfully cleared the resistance zone, and be expected to continue up to 1.2300.

On the other hand, a break below 1.1678 would produce a lower low which would be a sign of a change in the short-term trend from up to down.

Such a move would be expected to continue down to support at the lower channel line at 1.1590.

 

Data for the Pound

The Bank of England (BOE) interest rate meeting on Thursday, December 14 at 12.00 (GMT) is the main economic data event in the week ahead, and although no change of policy is expected the minutes, released immediately afterward, could be instructive in showing members thinking on future policy.

Before the meeting, UK inflation will be brought under the spotlight on Tuesday, December 13 when November CPI is released at 09.30.

On Wednesday, December 14 at 09.30 the ONS release Unemployment data, which is forecast to show a 4.8% Unemployment rate (Oct), a 5k rise in the

Claimant Count (Nov)and Average Earnings Including Bonuses (Oct) rising by 2.3%.

On Thursday, December 14 at 09.30 Retail Sales in November is released and expected to come out at 0.2% mom.

Data for the Euro

It is a thin week for the Euro with the main data release CPI on Friday, December 16, which expected to show a rise of 0.6% yoy in November.

Then on Thursday, December 15 we get the release of Manufacturing and Services PMI for December, which are both expected to come out at 53.8.

Source: Pound Sterling

---