The Euro managed to gain versus the Great British pound in the previous European trading exchanges amidst the challenges that the European region is facing. Hopes that the European officials could do more to allay fears over uncertainties in the region at their meeting today, could have done something to support the single currency. In today’s European trades, the EUR/GBP is expected to decline as market sentiment is likely to remain negative.
The French and Industrial Production data released last Friday highlighted the worsening economy of the region, dropping in September by 2.7 percent and 1.5 percent, respectively. With increasing concerns over the economy of the Euro Zone, risk sentiment is seen to weaken, thereby weighing on demand for the shared currency. Also seen to pull down the common currency are concerns over the US fiscal cliff, believed by some to push the world’s strongest economy into recession. Investors fear that President Barack Obama would struggle to convince Congress over deficit reductions to avoid automatic spending cuts and tax increases that are seen to be detrimental to the US economy, and until it remains unclear, traders are likely to avoid risk and seek refuge from safer assets.
Today, the Eurogroup officials are set to meet but are expected to delay the decision over extending financial assistance to Greece after Prime Minister Antonis Samaras won the support of the Parliament over cuts in pensions and benefits. The finance leaders are unlikely to come up yet with a final decision on the aid package for Greece, as they are still said to assess the sufficiency of the recently approved cuts that would warrant additional aid. With these events putting the Euro Zone economy at risk, a sell bias for the EUR/GBP is recommended in today’s European trades.
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