GBP/USD Fundamental Forecast – August 22. 2016

By:

Published: Aug 19, 2016, 11:40 UTC

The GBP/USD eased down 50 points to trade at 1.3120 after soaring on Thursday as retail sales printed much better than expected. Today the US dollar

GBP/USD Fundamental Forecast – August 22. 2016

The GBP/USD eased down 50 points to trade at 1.3120 after soaring on Thursday as retail sales printed much better than expected. Today the US dollar recovered losses while the pound corrected from its rally yesterday. Sterling bounced back to a two-week high of $1.3172 yesterday after the publication of strong retail sales figures. The Daily Telegraph says UK retail sales rose 1.4% month-on-month in July, well ahead of forecasts of a 0.2% rise. Warm weather and the plunge in the pound, which boosted tourist spending, were cited as reasons for the jump.

The UK government ran a budget surplus in July, the first full month since the EU referendum result in June that forced a rethink on austerity. Tax receipts exceeded government spending by almost £1.5bn, report the Office for National Statistics (ONS). Excluding the contribution of taxpayer-backed banks, the surplus on spending stood at around £1bn.

In the wake of the vote for Brexit, that will be taken as a reassuring sign that British businesses have been growing profits steadily, leaving them well placed to deal with the economic headwinds ahead.

That there was a surplus at all is positive: some analysts feared weaker growth had prompted a net deficit in what is typically a strong month for tax income, notes The Guardian.

The pound has been helped by stronger employment and retail sales data, which at least on the surface suggest that the referendum was not as disruptive as it may have appeared. We are still skeptical of that conclusion and have recognized that the impact will be more like cooking frogs than microwaving a meal. Of course, the slide in sterling and drop in interest rates (more when the BOE failed to buy its full quota) can and likely will cushion the blow.

FxEmpire provides a wide variety of analysis on a daily, weekly and monthly basis ranging from our exceptional technical analysis as well as our in-depth fundamental analysis along with our daily news and market updates. To get the best understanding of each asset it is important to review the short term daily analysis with the longer term monthly reports. To get email notification when each of these are posted please sign up for our daily newsletter.

Upcoming Economic Events that you should be monitoring:

Monday, August 22, 2016

Country	Name	Volatility	Previous
EUR	Markit Services PMI	2	54.4
EUR	Markit Manufacturing PMI	2	53.8
EUR	Markit PMI Composite	2	55.3
EUR	Markit Services PMI	2	52.9
EUR	Markit Manufacturing PMI	2	52
EUR	Markit PMI Composite	2	53.2
USD	Markit Manufacturing PMI	2	52.9
USD	Markit Services PMI	2	51.4
USD	Markit PMI Composite	2	51.8
GBP	Gfk Consumer Confidence	2	-12
GBP	Inflation Report Hearings	3
USD	Durable Goods Orders CORE	2	-0.5
USD	Durable Goods Orders	2	-4
USD	New Home Sales (MoM)	2	0.592
USD	New Home Sales Change (MoM)	2	3.5