EUR or Euro is considered to be the Eurozone currency on the official level. It is actively used in nineteen countries. That’s why the correlation between the money and the economic state of this region is rather high.
GBP or Pound Sterling is an English currency. It possesses the characteristics of the most stable and costly currencies worldwide. It is explained by the big gold supply, which accounts for approximately 40%-60%.
The central bank of both countries means a lot as the currencies depend on the European and English economies. For this reason, traders should monitor changes in financial policy (in the eurozone and England).
For instance, the ECB meets on the first Thursday once a month. There are no meetings in January because people celebrate public holidays. In 45 minutes there is a conference, where the ECB’s President reads the Governing Council’s statement aloud and answers questions asked by the press.
This press-conference influences the pair of the euro/pound. After stating the info about the interest rate, volatility can drastically jump. But it also impacts EUR/GBP.
After the ECB publishes what it has decided regarding the interest rate, the Bank of England sets the financial policy 45 minutes before the issuing of the ECB final decision on the discount rate.
After the decision is stated, the Bank of England doesn’t organize a press conference. That’s why traders should monitor the changes themselves. If you get the choice first, you can make a nice profit.
Except for the main factors, traders also have to consider such things as the CPI, which shows the economic stability of the eurozone.
The European Consumer Price Index demonstrates the level of rising prices within the EU. The Central Bank of Europe directly depends on the inflation in distinguishing financial policy.
There are some more significant news releases, such as PMI (the Purchasing Manager’s Index) and the business activity index. PMI lets us know if a sector is growing or decreasing. Traders also have to keep in mind the GDP (gross domestic product) and the figures of unemployment.
Eventually, economic news within a month allows traders to guess the decisions of the ECB. If inflation drops lower than the ECB is predicting, we expect the interest rates to fall. After that, we will see the effect on the currency pair of the EUR/GBP and watch the pound sterling strengthen.
The Bank of England has a substantial impact on the changes in the GBP. The rising prices have to be held at the figure of 2%. To maintain this, the Bank of England works with MPC or Monetary Policy Committee, which meets every month. Their goal is to evaluate the economic state of the country.
Compared with ECB meetings, the meetings of IPU are never followed by press conferences (only if the discount rate doesn’t change).
UK GDP information has a strong effect on the GBP and EUR/GBP currency pair in general. Moreover, traders have to watch retail sales data and the PMI, demonstrating the figures for inflation.
As long as rising prices aren’t typical for England, the Euro’s behavior should be studied more. Every meeting of ECB provides a nice change for making a profit. So, the main thing is proper monitoring.