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Latest EUR GBP Analysis and Forecasts

Macrowatch – US-China optimism aims stocks higher, further gains forecast

  • US President Trump spoke on trade at the Economic Club of New York on Tuesday with a positive view on a China trade deal, but also with threats of further tariffs if a deal was not made.
Trump economic club NY
  • Then Thursday evening saw Larry Kudlow (economic advisor at the White House) signal a deal with China was close.
Larry Kudlow
  • US share indices (the Dow, Nasdaq and S&P 500), went on to hit all-time highs Friday.
  • Jerome Powell (Fed Chairman) gave an upbeat account on the US economic outlook when testifying to Congress through the middle of the week but didn’t signal the path for interest rates into 2020.
  • In the UK, the Brexit Party will not stand in any of the constituencies won by the Tories in 2017 and are not contesting 38 other marginal seats that the Conservatives could win.
  • The chances of a majority Conservative government have increased, echoed by opinion polls that signal a 10-13 point lead for the Conservatives over Labour.
  • This has seen a stronger GBP, with the Pound at its strongest level versus the Euro for six months.
  • The FTSE 100 has underperformed European/ US stock indices given the negative repercussion for the UK benchmark average from Sterling strength.
  • Hong Kong has seen more violent demonstrations and responses from the authorities, which has had some only minimal negative impact on Asian (and global) stock markets.
Hong Kong protests
  • The impeachment enquiry into President Trump has moved into the public arena, but without noteworthy bearing on financial markets. But we still anticipate this impacting later in 2019 and into 2020.

Key this week

  • US-China trade talks
  • UK election campaign and opinion polls
  • Tensions in Hong Kong
  • US impeachment hearings.
  • Reserve Bank of Australia (RBA) Minutes Tuesday, People’s Bank of China (PBoC) interest rate decision and the FOMC Meeting Minutes both on Wednesday.
  • Data is light with Friday’s Japanese Consumer Price Index (CPI), German GDP and global Purchasing Managers Index (PMI) the main foci.
Date Key Macroeconomic Events
18/11/19 Nothing noteworthy
19/11/19 Reserve Bank of Australia Meeting Minutes
20/11/19 PBoC interest rate decision; Canadian CPI; FOMC Meeting Minutes
21/11/19 Nothing noteworthy
22/11/19 Japanese CPI; German GDP; global PMI data

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EUR/GBP Live and Historical Rates

The EUR/GBP pair – also known as the Chunnel – is yet another pair made up of two major currencies, which does not itself qualify as a major. The Chunnel is obviously massively influenced by the close correlation of the EU and British economies, and that will likely remain the case after Brexit too. The chart above shows how many GBPs one needs to purchase a EUR.  


Used by 21 countries and some 324 million people as official currency, the EUR is the common currency of the world’s biggest economy, the Eurozone. While 7 EU members are bound by treaty to join in the future, in the wake of the 2008 global financial crisis, the appetite on the part of these countries to join the Euro club has quite noticeably subsided. Still, the Euro is used de-facto by at least as many people as the population of the Eurozone, and the currency is the second most traded, as well as the second biggest reserve currency of the world.


The British Pound is a high-profile currency as well. In addition to being the world’s oldest currency still in use today, it is the 4th most traded one and the third largest reserve currency behind the USD and the EUR. Viewed by many as a symbol and guarantor of British sovereignty, the GBP was only allowed to float in 1971. During its EU membership, Britain refused to surrender its currency and join the Euro and now with the Brexit procedure launched, the future of the GBP seems assured.

EURGBP Analysis

Due to the close economic interdependence between Britain and the EU (a status-quo likely to survive the impending Brexit too), the GBP and the EUR are quite closely aligned. Carry trading isn’t a profitable option on this pair, due to the small interest rate spread between the currencies.

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