GBP/USD Weekly Fundamental Analysis April 9-13, 2012, Forecast

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Introduction: While the ranges are wider (and so should stops be), the lines are rather distinctive, especially towards the borders of the long term wide range. This pair makes for good trades, with the new austerity program implemented in the UK, the GBP is moving more on Fundamentals now.

  • The interest rate differential between the Bank of England (BoE) and the Federal Reserve
  • High yield and attractive growth in the UK drives GBP/USD higher

 

Analysis and Recommendation:

The GBP/USD passed and held above the 1.60 level for two days, but could not sustain against the strength of the USD after the release of the FOMC minutes on Tuesday. The greenback surged against all of its partners.

Strong data from the US flowed all week, until a disappointing NFP report after the markets had closed for the holiday weekend. The UK is also closed on Easter Monday.

The sterling had several strong reports over the past week but they were mixed with several negatives also, PMI and Service PMI and Housing were over forecast. The BoE maintained interest rates. It was just a mixed bag

Whereas the euro began to tumble mid week on continued worries about Spain and Italy, overshadowed the EU Finance Ministers approval of the new firewall limits.

Disappointing economic data flowed all week. Spain introduced a tough new budget, which incorporated all the austerity measures demanded by the EU, but in reality would be difficult or impossible to implement.

Greece continued in the headlines, as worried about the necessity of a 3rd bailout became news.

04/06/2012

1.5858

1.5829

1.5866

1.5825

0.18%

04/05/2012

1.5829

1.5903

1.5909

1.5805

-0.47%

04/04/2012

1.5903

1.5903

1.5911

1.5834

0.00%

04/03/2012

1.5905

1.6036

1.6046

1.5892

-0.82%

04/02/2012

1.6036

1.6012

1.6062

1.5980

0.15%

04/01/2012

1.6012

1.6025

1.6028

1.6007

-0.08%

 

Historical:

Highest: 1.681 USD on 17 Nov 2009.

Average: 1.5807 USD over this period

Economic Data from Europe for the week of April 2-6, 2012 actual v. forecast

 

 

CHF

 

 

Retail Sales (YoY) 

0.8%

 

3.2% 

 

4.7% 

   
 

 

CHF

 

 

SVME PMI 

51.1

 

49.5 

 

49.0 

 

 
 

 

EUR

 

 

French Manufacturing PMI 

46.7

 

47.6 

 

47.6 

 

 
 

 

EUR

 

 

German Manufacturing PMI 

48.4

 

48.1 

 

48.1 

 

 
 

 

EUR

 

 

Manufacturing PMI 

47.7

 

47.7 

 

47.7 

 

 
 

 

GBP

 

 

Manufacturing PMI 

52.1

 

50.5 

 

51.5 

   
 

 

EUR

 

 

Unemployment Rate 

10.8%

 

10.8% 

 

10.7% 

 

 
 

 

EUR

 

 

GDP (QoQ) 

-0.3%

 

-0.3% 

 

-0.3% 

 

 

Apr. 04

 

GBP

 

 

Halifax House Price Index (MoM) 

2.2%

 

-0.3% 

 

-0.4% 

   

 

 

GBP

 

 

Services PMI 

55.3

 

53.5 

 

53.8 

 

 

 

 

EUR

 

 

Retail Sales (MoM) 

-0.1%

 

0.1% 

 

1.1% 

   

 

 

EUR

 

 

German Factory Orders (MoM) 

0.3%

 

1.2% 

 

-1.8% 

   

 

 

EUR

 

 

Interest Rate Decision 

1.00%

 

1.00% 

 

1.00% 

 

 

 

 

EUR

 

 

ECB Press Conference 

 

 

 

 

 

 

 

Apr. 05

 

CHF

 

 

CPI (MoM) 

0.6%

 

0.4% 

 

0.3% 

 

 

 

 

EUR

 

 

Dutch CPI (YoY) 

2.50%

 

2.20% 

 

2.50% 

 

 

 

 

GBP

 

 

Industrial Production (MoM) 

0.4%

 

0.3% 

 

-0.6% 

   

 

 

GBP

 

 

Manufacturing Production (MoM) 

-1.0%

 

0.1% 

 

-0.3% 

   

 

 

GBP

 

 

Interest Rate Decision 

0.50%

 

0.50% 

 

0.50% 

 

 

 

 

GBP

 

 

BOE QE Total 

325B

 

325B 

 

325B 

 

 

 

 

GBP

 

 

NIESR GDP Estimate 

0.1%

 

 

 

0.0% 

   

 

Economic Reports from the USA for the week of April 2-6, 2012 actual v. forecast

Apr. 02

 

USD

 

 

 

ISM Manufacturing Index 

53.4

 

53.0 

 

52.4 

 

 

Apr. 03

 

USD

 

 

 

FOMC Meeting Minutes 

 

 

 

 

 

 

 

Apr. 04

 

USD

 

 

 

ADP Nonfarm Employment Change 

209K

 

200K 

 

230K 

   

Apr. 05

 

USD

 

 

 

Initial Jobless Claims 

357K

 

355K 

 

363K 

   

Apr. 06

 

USD

 

 

 

Nonfarm Payrolls 

120K

 

203K 

 

240K 

   

 

 

USD

 

 

 

Unemployment Rate 

8.2%

 

8.3% 

 

8.3% 

 

 

 

Economic Events

Economic Highlights of the coming week for the USA (only minor reports, a very light week)

Apr. 9 

15:00

 

USD

 

 

 

CB Employment Trends Index 

 

 

 

 

107.50 

 

 

Apr 10 

12:30

 

USD

 

 

 

NFIB Small Business Optimism 

 

 

 

 

94.3 

 

 

 

13:55

 

USD

 

 

 

Redbook (MoM) 

 

 

 

 

0.70% 

 

 

 

15:00

 

USD

 

 

 

Wholesale Inventories (MoM) 

 

 

0.5% 

 

0.4% 

 

 

 

15:00

 

USD

 

 

 

IBD/TIPP Economic Optimism 

 

 

 

 

47.5 

 

 

 

21:30

 

USD

 

 

 

API Weekly Crude Stock 

 

 

 

 

7.85M 

 

 

 

21:30

 

USD

 

 

 

API Weekly Gasoline Stock 

 

 

 

 

-4.46M

   

 

Economic Highlights of the coming week that affect the Euro, the GBP and the Franc

Apr. 10

00:01

 

GBP

 

 

 

RICS House Price Balance 

 

 

 

 

-13% 

 

 

 

06:45

 

CHF

 

 

 

Unemployment Rate 

 

 

 

 

3.1% 

 

 

 Apr. 12 

06:30

 

EUR

 

 

 

French CPI (MoM) 

 

 

 

 

0.4% 

 

 

 

08:30

 

EUR

 

 

 

Dutch Retail Sales (YoY) 

 

 

 

 

0.80% 

 

 

 

09:30

 

GBP

 

 

 

Trade Balance 

 

 

 

 

-7.5B 

 

 

 

10:00

 

EUR

 

 

 

Industrial Production (MoM) 

 

 

 

 

0.2% 

 

 

 

10:00

 

EUR

 

 

 

Portuguese CPI (MoM) 

 

 

 

 

0.10% 

 

 

 

10:00

 

EUR

 

 

 

Greek Unemployment Rate 

 

 

 

 

21.00% 

 

 

 Apr. 13 

07:00

 

EUR

 

 

 

German CPI (MoM) 

 

 

 

 

0.3% 

 

 

 

07:00

 

EUR

 

 

 

Finnish CPI (YoY) 

 

 

 

 

3.10% 

 

 

 

09:30

 

GBP

 

 

 

PPI Input (MoM) 

 

 

 

 

2.1% 

 

 


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