Fundamental Analysis By forum.forex

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GBP/USD fundamental analysis

GBP/USD looks to be stabilizing after the slide that has taken it from a recent high at 1.3518 recorded on November 18 to current levels around 1.3375. That slide was due principally to US Dollar strength on suggestions that the US could speed up its tapering of monetary assistance after the re-nomination of Jay Powell as Chair of the Federal Reserve.

So far, there has been little response in the markets to problems for the UK Prime Minister but there is still a risk that if the pressures on Boris Johnson should grow then the Pound will suffer correspondingly.

 

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The British pound took some impetus from expectations of the future of tightening the Bank of England policy, in addition to the easing of fears of the new Corona variable, despite its widespread. The sterling did not notice much of the criticism of British Prime Minister Johnson and his government. A leading independent economic think tank says British Prime Minister Boris Johnson remaining in office could cause greater economic repercussions than if he were to leave. Capital Economics sees little prospect of a shift in material policy under a new PM which could allow the economy to continue to recover over the coming months.


Chief UK economist at Capital Economics is looking for two potential flashpoints over the coming days: The first is the release of Sue Gray's report on what happened and whether the rules were broken. The implications for Johnson of being accused of breaking the law cannot be underestimated. Another hot spot to watch is the resignation of cabinet members, which is usually a source of pressure on the prime minister.

On the other hand, The Euro (EUR) firmed early last week amid a drop in Eurozone unemployment, a weaker US Dollar (USD) and a risk-off market mood.​

The single currency then wavered through much of the week. A retreating US Dollar buoyed EUR while a dovish European Central Bank (ECB) and an improving market mood offset the upside.
Finally, EUR lost ground to GBP by the end of the week. The Eurozone reported its first trade deficit since January 2014, while German GDP data confirmed that Europe's largest economy remains below pre-pandemic levels.

 

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Jan-30, 2022, Eurozone Fundamental Analysis, By forex forum.​

It's troublesome to contemplate the Euro's potential with out contemplating the obviously apparent variations within the path to normalization for the ECB when in comparison with different main central banks. Admittedly, the Eurozone could be very completely different in its make as much as different single nations however proper now its troublesome to see indicators of Euro energy.
Whereas the ECB is anticipated to keep up its dovish stance on fee hikes and inflation over the medium time period, the Fed has ramped up already bold expectations in the case of the tempo and frequency of fee hikes this yr. The greenback shot up after Wednesday's FOMC assembly and press convention, which was most evident through the EUR/USD pair and US Greenback Index (DXY). The Euro has shot down within the listing of currencies in comparison with the US greenback and at present trades round 2% decrease in 2022 up to now.

Italian elections drag on At the end of the week, it should be noted that there is still no consensus on who will be the next Italian president.​

The lengthy process of voting every day until a president is elected has been recognized as inefficient, but the behind-the-scenes antics and deals are said to offer Italian audiences a sort of theatrical experience and draw in many viewers.