News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • UK PM Johnson says virus restrictions likely to last 6-months $GBP
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/38gTDn8ejP https://t.co/CjCiVL0C9q
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/S9CEcBm5Qe https://t.co/0gQ60Dd1S5
  • Optimism $GBP https://t.co/UjSo3Dpthr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.44%, while traders in NZD/USD are at opposite extremes with 70.05%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/n7ePyLk3EB
  • Heads Up:🇧🇷 BCB Copom Meeting Minutes due at 11:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-22
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.13% Gold: -0.34% Silver: -1.88% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/1fgVHj1F6Z
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.12% 🇳🇿NZD: 0.01% 🇨🇦CAD: -0.03% 🇨🇭CHF: -0.17% 🇬🇧GBP: -0.19% 🇪🇺EUR: -0.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/2CA80kFhl2
  • Coming up at half past the hour. Do join me if you can, using the link below https://t.co/RAiCJNLuSC
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Germany 30: 1.18% FTSE 100: 0.49% France 40: 0.40% US 500: 0.22% Wall Street: -0.03% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/Jb7LZOruhP
Put March 4 In Your Diary: It Could Be a Bad Day For EURGBP

Put March 4 In Your Diary: It Could Be a Bad Day For EURGBP

2018-02-22 16:10:00
Martin Essex, MSTA, Analyst
Share:

Downside risk for EURGBP

- An important date to mark in your diary is March 4. On that day there is a general election in Italy.

-On the same day, the result should be known of a vote by members of Germany’s SPD on whether to join a grand coalition with Chancellor Merkel’s conservatives.

- The ‘wrong’ result in either or both could weaken EURGBP.

Learn how to trade like an expert by reading our guide to the Traits of Successful Traders

New to forex and want to find out more about trading EUR? Take a look at our Forex Trading Guides

Go Short EURGBP

A date to mark in your diary is March 4. On that day there is a general election in Italy and leading in the opinion polls is the anti-establishment Five Star Movement, which is broadly Eurosceptic. The right-wing Northern League is Eurosceptic too, so if either party becomes part of the coalition government that seems likely once the votes are in, the Euro could suffer.

On the same day, the result should be known of a vote by members of Germany’s center-left Social Democratic Party on whether to join a grand coalition with Chancellor Angela Merkel’s conservatives. If they agree, Germany will finally have a new government. However, if they disagree, then either Merkel will have to form a minority government or there will have to be fresh elections – both potentially negative developments for the currency.

In practice, this means political instability is as much a fear in the Euro-Zone as it is in the UK, where the political future of Prime Minister Theresa May remains under a cloud. If her ruling Conservative Party decides to replace her, or she decides to call a general election, the Pound would certainly suffer – but currently that seems less likely than it once did.

The current stability of EURGBP therefore seems unlikely to last much longer. One serious possibility is that political problems in Germany or Italy – or a breakthrough in the Brexit negotiations – knock EURGBP lower, particularly as the European Central Bank shows no sign of bringing forward its timetable for tightening Euro-Zone monetary policy.

EURGBP Price Chart, Daily Timeframe (September 1, 2017 to February 22, 2018)

EURGBP price chart

Chart by IG

As the chart above shows, EURGBP has mostly traded in a relatively narrow range between 0.90 and 0.87 ever since mid-September last year. However, if Germany’s SPD votes against a coalition government or Eurosceptics become part of a coalition in Italy, it can be expected to drop. Any move under the January 25 low of 0.8690 would be a strong sell signal, while only a climb above January 12’s 0.8929 high would dispel the negativity. A stop just above there would therefore be wise.

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

For help to trade profitably, check out the IG Client Sentiment data

Like to learn more? Listen to our regular Trading Webinars

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES