GBP/USD Fundamental Analysis July 5, 2012, Forecast

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Analysis and Recommendations:

The GBP/USD fell as the USD gained momentum today to trade at 1.5607 ahead of the BoE meeting tomorrow. The July 4th US holiday will weigh on liquidity and activity in today’s North American session. Leading into the open, markets are quiet but favoring risk aversion. News flow is focused on the Libor furor, signs of stabilization in the most recent round of PMIs and the upcoming round of central bank decisions. Today, the Riksbank left rates unchanged at 1.5% noting that unease in Europe is casting a shadow over the Swedish economy. However since some had expected an interest rate cut, EUR is the worst performer, down 0.3%, while GBP and NOK are also slightly weaker and AUD and CAD are essentially flat. Today is likely to be a relatively quiet session.

Expectations for the BoE have been much in favor of additional monetary easing and a possible interest rate cut, while the ECB was in favor of a rate cut, investors thought these were sure things, but as the day moves on, traders have been questioning their validity.

UK’s Construction Purchasing Managers’ Index (PMI) declined by 6.2 points to 48.2-mark in June as against a previous rise of 54.4-level in May. Net Lending to Individuals was at 1.3 billion Pounds in May as compared to previous 1.4 billion.

UK’s M4 Money Supply declined by 0.1 percent in May from previous rise of 0.9 percent a month ago. Mortgage Approvals declined by 1,000 to 51,000 in May with respect to earlier 52,000 in previous month. British Retail Consortium (BRC) Shop Price Index rose at slow pace of 1.1 percent in June from previous rise of 1.5 percent in May.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

On the 4th of July holiday; there were only a few eco releases, see actual v. forecast below

Jul. 04

 

AUD

 

 

 

Retail Sales (MoM) 

0.5%

 

0.2% 

 

0.1% 

   

 

 

GBP

 

 

 

Services PMI 

51.3

 

53.0 

 

53.3 

 

 

 

 

EUR

 

 

 

Retail Sales (MoM) 

0.6%

 

0.3% 

 

-1.4% 

   

 

 

EUR

 

 

 

GDP (QoQ) 

0.0%

 

0.0% 

 

0.0% 

   

 

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Date

Time

Currency

 Event

Forecast

Previous

Jul 5

10:00

EUR

German Factory Orders m/m

0.2%

-1.9%

 

11:00

GBP

Official Bank Rate

0.50%

0.50%

11:45

EUR

Minimum Bid Rate

0.75%

1.00%

12:15

USD

ADP Non-Farm Employment Change

101K

133K

12:30

USD

Unemployment Claims

385K

386K

14:00

USD

ISM Non-Manufacturing PMI

53.1

53.7

15:00

USD

Crude Oil Inventories

 

-0.1M

Jul 6

7:00

CHF

Foreign Currency Reserves

 

303.8B

7:15

CHF

CPI m/m

-0.3%

0.0%

8:30

GBP

PPI Input m/m

-2.1%

-2.5%

10:00

EUR

German Industrial Production m/m

0.3%

-2.2%

12:30

USD

Non-Farm Employment Change

92K

69K

12:30

USD

Unemployment Rate

8.2%

8.2%

 

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