GBP/USD Forecast Jan. 23-27, 2012, Fundamental Analysis

GBP/USD Forecast Jan. 23-27, 2012, Fundamental Analysis

Regarding data from the U.K., it did not have much impact on the pair’s movements,  as while inflation retreated to 4.2% in the year ended December from the prior 4.8%, unemployment leaped to 8.4%, the highest level in 16 years, which followed the general sentiment.

This week, the main focus will be on growth data from both economies as investors will be eager to see the effect of the global slowdown the escalating European debt crisis on both economies in the fourth quarter.

However, more focus may be given to the latest developments in the euro area as EU finance chiefs meet inBrusselsand policy makers and business leaders meet in Davos, while euro area, includingGermany,France,SpainandItaly, prepare to sell debt.

The release of the data this week will be as follows:

Monday Jan. 23:

Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data.

Tuesday Jan. 24:

Attention will be toward public finances excluding interventions will be due with expectations referring to a narrowing deficit to 15.2 billion pounds in Dec. from the prior 18.1 billion pounds, while theU.S.lacks fundamentals.

Wednesday Jan. 25:

BoE minutes, due at 09:30 GMT; will be carefully watched where expectations refer to a unanimous vote regarding the hold of monetary policy this month. At the same time, BBA loans for house purchases will be released.

However, more attention will be given to GDP for the fourth quarter, due also at 09:30 GMT, as the advanced reading is predicted to show that the economy contracted 0.1% from 0.6% expansion in the three months ended September while the annual reading will record a widening expansion to 0.8% from the prior 0.5%.

With lower relevance, monthly and quarterly index of services and CBI trends will be available at the same time.

In the U.S., eyes will be on MBA mortgage applications for Jan. 20 at 12:00 GMT while will be followed by pending home sales, as of 15:00 GMT,  which are estimated to record 0.0% in Dec. compared with a prior of 7.3% advance. At 17:30 GMT, the FOMC rate decision is predicted to hold no surprise as the Fed is expected to keep the borrowing cost at its record low of 0.25%.

Thursday Jan. 26:

The U.K. lack fundamentals, yet the U.S. has a busy day; durable goods orders report is due at 13:30 GMT, where its is projected to record 2.0% advance in Dec. relative to the preceding 3.8% rise.   At the same time, initial jobless claims for the week ended Jan. 21 and continuing claims for the week ending Jan 14.

As of 15:00 GMT, new home sales for Dec. are expected to linger at 1.6%, while leading indicators will record 0.7% in Dec. from the prior 0.5%.

Friday Jan. 27:

The week ends with the release the most awaited data which is U.S. annualized GDP for the fourth quarter, due at 13:30 GMT, where it is predicted to show that the economy expanded 3.0% from 1.3% in the 3q. At 14:55 GMT, University of Michigan confidence will remain steady at 74.0 in Jan, according to median forecasts.