GBP/USD Fundamental Forecast week of July 18, 2016

The GBP/USD saw a gain of 1.74% to close the week at 1.3182 but gave back its gains after touching the 1.33 price as safe heaven trades returned to the markets on Friday after the coup in Turkey and a terrorist attack in Nice. The pound, battered since Britain voted to leave the European Union three weeks ago, had resumed its slump against the dollar after a sharp rally Thursday following the Bank of England’s unexpected decision to not cut rates following the Brexit vote.

“Sterling’s best week in seven years may not be sustainable with expectations high for the BoE to chop rates to new lows as soon as its next meeting on Aug 4,” said Joe Manimbo of Western Union Business Solutions.

Sterling slipped from a two-week high against the dollar on Friday as upbeat U.S. data boosted the greenback across the board, and the Bank of England’s chief economist said Britain needed “muscular” stimulus to boost the economy.

In his first speech since Britain voted last month to leave the European Union, the BoE’s Andrew Haldane said the central bank needed to come up with a “package of mutually-complementary monetary policy easing measures” in time for a rate-setting meeting on Aug. 4.

The pound fell almost 1 U.S. cent after the speech, and continued to weaken throughout the day, as data showed U.S. retail sales rose more than expected in June, reinforcing the view that U.S. economic growth picked up in the second quarter.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.