GBP/USD Fundamental Analysis September 24, 2012 Forecast

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Analysis and Recommendations:

The GBP/USD skyrocketed today, almost breaking the 1.63 price and holding steady at 1.6268 as the US dollar continued to weaken and on positive eco data. The Public Sector Net Borrowing came in well below forecast, showing that austerity measures adopted in the UK are working. The UK public sector net borrowing data came in lower than expected, at £14.4bn vs £15.0bn consensus, leaving the government running about £10bn behind target at this point.

Sterling is stronger, up 0.4% from yesterday’s close, in line with EUR, as market sentiment is boosted by developments regarding Spain.  Domestically, government borrowing has increased, with the UK posting its largest monthly deficit for August on record.  BoE Governor King appears comfortable with these developments, attributing the shortfall to economic contraction rather than any change in fiscal policy.  However, the increase in borrowing highlights one of the major risks for GBP, given that both Moody’s and Fitch maintain a negative outlook on the UK’s AAA rating

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 September 21, 2012 actual v. forecast

Date

 

Currency

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Sep. 21

 

AUD

 

 

CB Leading Index (MoM) 

0.0%

 

 

 

0.5% 

   

 

 

NZD

 

 

Credit Card Spending (YoY) 

1.0%

 

 

 

0.1% 

 

 

 

 

EUR

 

 

Dutch Consumer Spending 

-1.50

 

 

 

-0.50 

   

 

 

GBP

 

 

Public Sector Net Borrowing 

12.4B

 

13.3B 

 

-1.9B 

   

 

 

CAD

 

 

Core CPI (MoM) 

0.3%

 

0.3% 

 

-0.1% 

 

 

 

 

CAD

 

 

CPI (MoM) 

0.2%

 

0.4% 

 

-0.1% 

 

 

 

 

CAD

 

 

Wholesale Sales (MoM) 

-0.6%

 

-0.1% 

 

-0.3% 

   

 

 

CAD

 

 

CPI (YoY) 

1.2%

 

1.0% 

 

1.3% 

 

 

 

 

EUR

 

 

Belgium NBB Business Climate 

-11.6

 

-11.2 

 

-11.8 

 

 

 

Upcoming Economic Events that affect the EUR ( there are no USD or CAD events )

Date

Time

Currency

Event

Forecast

Previous

 Sep. 24

09:00

EUR

German Ifo Business Climate Index 

102.1 

102.3 

 

09:00

EUR

German Current Assessment 

 

111.2 

 

09:00

EUR

German Business Expectations 

 

94.2 

Government Bond Auction

Date Time Country 

Sep 24 09:10 Norway 

Sep 24 09:30 Germany 

Sep 24 10:00 Belgium 

Sep 24 15:30 Italy  

Sep 25 08:30 Holland 

Sep 25 08:30 Spain 

Sep 25 09:10 Italy  

Sep 25 14:30 UK 

Sep 25 17:00 US 

Sep 26 09:10 Italy  

Sep 26 09:10 Sweden 

Sep 26 09:00 Germany 

Sep 26 14:30 Sweden 

Sep 26 17:00 US 

Sep 27 00:30 Japan 

Sep 27 09:10 Italy  

Sep 27 17:00 US 

 

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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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Taco

“The Public Sector Net Borrowing came in well below forecast, showing that austerity measures adopted in the UK are working”
This is absurd. The numbers where dramatic and now it is clear that UK can only monetize its Debt. 40% of bond houses now are telling publicly that they are going to take their money out of the UK. 60% tell publicly that they are prepared to become slaughtered in the UK. But I do not believe them.
So there is the question how comes the Pound went up. May be people try to cover their Euro short through the Pound.

FX Empire Analyst - Barry Norman

Every report is open to interpretation and application.

Traders saw the positive and the negative in this report. I myself can not explain the strength of the GBP breaking 1.63 but when compared to the EUR or USD, I think that the UK has taken more positive steps to correct and deal with their eco problems. I am not endorsing their policies or saying they are correct, I am saying at least the politicians and leadership have steered a course that they think is correct. Leadership is leadership as opposed to the EU which no one really seems to come up with a plan of action and the US where they are headed towards a fiscal cliff and Obama and Congress just ignore the mounting debt..

 
 

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