GBP/USD Fundamental Forecast – August 31. 2016

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Published: Aug 30, 2016, 13:22 UTC

The GBP/USD edged closer to its lowest point since the Brexit vote but more on the strength of the US dollar which continues to rally on strong economic

GBP/USD Fundamental Forecast – August 31. 2016

The GBP/USD edged closer to its lowest point since the Brexit vote but more on the strength of the US dollar which continues to rally on strong economic data and a push by the Fed for multiple rate increases this year. The pound is trading at 1.3082 down 23 points as the greenback gained 21 points to trade at 95.74 its highest level this month. The pound is largely down due to a raft of official figures suggesting that the UK economy is not reeling in the immediate aftermath of June’s vote to leave the EU. From employment through to business investment and retail sales, the numbers have beaten expectations. But can this last for the UK economy and, by extension, sterling?

Well, there is an increasing chorus of economists suggesting that the post-Brexit recession many feared will be avoided. That’s even if growth is not exactly stellar. IHS Global Insight is the latest to add to this chorus.

The sentiment precedes the monthly group of PMI data due to be released later this week by data gatherer Markit, which is expected to show a rebound in business activity throughout August from a three-year low in July.

However, another survey due this week is expected to indicate continued weakness in the construction sector, while mortgage approval rates are predicted to hit their lowest level since March 2015.

Despite official figures released last week indicating the UK economy entered the June referendum in good health, many experts expect growth to slow sharply in the second half of the year, particularly after the Bank of England cut interest rates earlier this month.

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August 31, 2016

Country	Event	Volatility	Previous
GBP	Gfk Consumer Confidence	2	-12
JPY	Industrial Production	2	-1.5
JPY	Industrial Production	2	2.3
AUD	HIA New Home Sales	2	8.2
CHF	UBS Consumption Indicator	2	1.34
EUR	Unemployment Rate s.a.	3	6.1
EUR	Unemployment Change	3	-7
EUR	Unemployment	2	11.6
EUR	Unemployment Rate	2	10.1
EUR	Consumer Price Index	3	0.2
EUR	Consumer Price Index – Core	3	0.9
USD	ADP Employment Change	2	179
CAD	Gross Domestic Product Annualized	2	2.4
CAD	Gross Domestic Product	2	-0.6
USD	Chicago Purchasing Managers’ Index	2	55.8
USD	Pending Home Sales	2	1
USD	Pending Home Sales	2	0.2