GBP/USD Fundamental Analysis – Forecast for the week of August 15, 2016

The GBP/USD fell over 1% this week as Brexit data and worries continue to stress the pound. The massive stimulus program started this week by the BoE is also lowering the value of the currency which is expected to continue to decline to the 1.28 level this week Early in the week traders will take a look at UK consumer inflation which will weigh on the pound. The pound is trading at 1.2914 down over 12% on a year to date basis.

In the UK, output in the construction industry was estimated to have decreased by 0.7% compared with the first quarter, according to the Office for National Statistics. Downward pressure on the quarter came from all new work, which decreased by 0.8%, and repair and maintenance, which decreased by 0.5%.

In equities, London’s FTSE 100 Index was flip-flopping between gains and losses. Gainers were led by beverage maker Coca Cola HBC, 2.9% higher, followed by Rolls Royce, a maker of power and propulsion systems, 1.8% higher and Morrison (Wm) Supermarkets, up by 1.6%. Decliners were led by miners Rio Tinto, Fresnillo and Randgold Resources, 2.1%, 1.9% and 1.9% lower, respectively. Resort and theme park operator Merlin Entertainments was down by 1.8%.

The U.S. dollar weakened on Friday after U.S. retail sales were unexpectedly flat in July, while producer prices also fell in the same month, contrary to expectations, raising concerns about the strength of third-quarter economic growth.

Economists had forecast overall retail sales to rise 0.4 percent. The drop in producer prices, meanwhile, was the first since March and the largest since September 2015.

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