GBP/USD Fundamental Analysis – for the week of August 9, 2016

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Published: Aug 6, 2016, 06:04 UTC

The GBP/USD ended an active week at 1.307 after the Bank of England lowered rates and added additional stimulus to help jump start the economy after

GBP/USD Fundamental Analysis – for the week of August 9, 2016

The GBP/USD ended an active week at 1.307 after the Bank of England lowered rates and added additional stimulus to help jump start the economy after Brexit. The better than expected jobs data from the US sent the USD on a mini rally weighing on the pound. Indicators of the front week remain bearish. London’s blue-chip shares advanced to 14-month highs on Friday and mid-caps reclaimed pre-Brexit levels as investors continued to lap up UK monetary easing and built on that with news that Wall Street’s S&P 500 hit a fresh record high after the non-farm payrolls report delivered an estimate-beating result.

US non-farm payrolls added 255,000 jobs in July. Analysts penciled in a 180,000 forecast. The bullish run for jobs also put a December US rate hike back on the agenda but meantime boosted Wall Street shares.

UK investors were already celebrating the Bank of England’s decision on Thursday to cut rates to a fresh record low of 0.25% and to commit to buying up £70bn of government and corporate debt as it funnels liquidity back into high street lenders in the hope of averting growing risks of a UK recession following Britain’s decision to vote to quit the European Union.

The Bank of England cut its benchmark interest rate to the lowest in its 322-year history and revived a financial crisis-era bond-buying program to cushion the U.K. economy from the aftershocks of the vote to leave the European Union.

Thursday’s unexpectedly large and diverse stimulus package—which included a torrent of cheap cash for banks—underscores the concern at the central bank following the June 23 referendum.

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This Week’s Economic Events That You Should Be Monitoring:

Date	Country	Name	Volatility	Previous	Consensus
8/9/2016	GBP	NIESR GDP Estimate (3M)	3	0.6
8/10/2016	AUD	RBA’s Governor Stevens	3
8/10/2016	NZD	RBNZ Interest Rate Decision	3	2.25	2
8/10/2016	NZD	Monetary Policy Statement	3
8/10/2016	NZD	RBNZ Press Conference	3
8/12/2016	EUR	Gross Domestic Product M	3	0.3	0.3
8/12/2016	EUR	Gross Domestic Product Y	3	1.6	1.6
8/12/2016	USD	Retail Sales (MoM)	3	0.6	0.4