GBP/USD Monthly Fundamental Forecast – February 2016

Outlook and Recommendation

The GBP/USD ended the month at 1.4243 suffering from one its worse months in many years. Most traders were expecting good things from the UK and a strong pound only to be disappointed this past month. The pound was down 3.37% for the month. Now traders are looking forward to decisions on Brexit.

In response to less-than-ideal domestic data the Pound Sterling softened versus nearly all of its currency rivals today. This effectively pared recent Sterling gains with many predicting further losses to come amid concerns regarding a dovish Bank of England (BoE) and ‘Brexit’ uncertainty. January’s Nationwide House Prices came in at 4.4% on the year, missing the median market forecast 4.7% growth. On a monthly basis, January’s Nationwide House Prices came in at 0.3% which was well below the market consensus of 0.6%. In addition, December’s BBA Loans for House Purchase failed to meet with expectations of a rise from 44533 to 45500, with the actual result dropping to 43975.

In response to British fourth-quarter Gross Domestic Product data, which met with estimates of 0.5% growth on the quarter and 1.9% on the year, the Pound advanced against nearly all of its most traded currency rivals.

Although EU leaders have proposed an ‘emergency brake’ as an alternative to the 4-year benefits freeze desired by Cameron, the lack of a positive response to this news show that Eurosceptic are understandably wary about the fine print of the planned scheme, as well as the obvious differences between a temporary condition and a ‘blanket’ piece of legislature.

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.

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