GBP/USD Fundamental Analysis October 5, 2012 Forecast

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Analysis and Recommendations:

The GBP/USD climbed to 1.6175 on weakness in the USD after ECB Draghi’s press conference supported the single currency. Earlier today, The Bank of England did what was universally expected and left its asset purchase target unchanged at £375 billion and its benchmark rate at 0.5%.  The big choice lies in whether or not to expand the asset purchase program again at the November 8th meeting when the current round of purchases has been completed. For hints on the discussion on this topic that may have occurred we’ll have to wait for the meeting minutes that arrive on October 17th.

The ECB also held rates today as expected.

The GBP is up 0.2% from yesterday’s close, a mid-performer among the majors following the BoE’s decision to maintain policy, with the BoE rate at 0.5% and the asset purchase program at £375bn.  Given that the current round of easing – £50bn undertaken in July – is set to end over the next month, markets are likely to focus on policymakers’ tone over the coming weeks.

In the US today, unemployment numbers were lackluster but had little market affect, although the USD has weakened ahead of tomorrow’s nonfarm payroll report and on the strength of the euro after Mr. Draghi’s press conference.

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.

Economic Data October 4, 2012 actual v. forecast

Date

Currency

Event

Actual

 

Forecast

 

Previous

Oct. 04

AUD

Building Approvals (MoM) 

6.4%

 

4.7% 

 

-21.2% 

 

AUD

Retail Sales (MoM) 

0.2%

 

0.4% 

 

-0.8% 

 

GBP

Halifax House Price Index (MoM) 

-0.4%

 

0.2% 

 

-0.4% 

 

GBP

Interest Rate Decision 

0.50%

 

0.50% 

 

0.50% 

 

GBP

BOE QE Total 

375B

 

375B 

 

375B 

 

EUR

Interest Rate Decision 

0.75%

 

0.75% 

 

0.75% 

 

USD

Initial Jobless Claims 

367K

 

370K 

 

363K 

 

EUR

ECB Press Conference 

 

 

 

 

 

 

USD

Continuing Jobless Claims 

3281K

 

3271K 

 

3281K 

 

CAD

Ivey PMI 

60.4

 

59.0 

 

62.5 

 

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

Date

Time

Currency

Event

Forecast

Previous

 Oct. 05

10:00

EUR

GDP (QoQ) 

-0.2% 

-0.2% 

 

11:00

EUR

German Factory Orders (MoM) 

-0.5% 

0.5% 

 

13:30

USD

Average Hourly Earnings (MoM) 

0.2% 

0.0% 

 

13:30

USD

Nonfarm Payrolls 

110K 

96K 

 

13:30

USD

Average Weekly Hours 

34.4 

34.4 

 

13:30

USD

Private Nonfarm Payrolls 

125K 

103K 

Government Bond Auction

Date Time Country   

Oct 05 15:30 Italy 

 

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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