GBP/USD Weekly Fundamental Analysis – February 1-5, 2016 -Forecast

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Published: Jan 30, 2016, 13:22 UTC

Weekly Analysis and Recommendation: The GBP/USD closed the week at 1.4243 down on comments from Bank of England governor Carney as well as the upcoming

GBP/USD Weekly Fundamental Analysis – February 1-5, 2016 -Forecast

Weekly Analysis and Recommendation:

The GBP/USD closed the week at 1.4243 down on comments from Bank of England governor Carney as well as the upcoming discussion on Brexit. Sterling recently reached its lowest level versus the dollar since March 2009. According to Anthony Rayner, manager of Milton’s multi-asset fund range, the UK political narrative has been dominated by an increased risk of Brexit.

The pound has weakened more than 7 percent against the dollar and the euro since the day before the previous Inflation Report in November. It fell almost 4 percent versus the dollar in January alone. A weaker currency supports inflation as it pushes up prices of imported goods.

Data suggest the U.K. economy held up in the face of global turmoil. A GfK index of household confidence rose to the highest since August this month, while growth in the economy accelerated in the fourth quarter.

Britain’s biggest lenders will be required to hold more capital than smaller rivals to ensure they can keep credit flowing into the economy, under proposals from the Bank of England. In the latest effort to avoid another taxpayer bailout of the banking system, Threadneedle Street will require the divisions of banks involved in lending to businesses and individuals to keep some capital in a “systemic risk buffer”.

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.

Major Economic Events for the week:

	Cur.	Event	Actual	Forecast	Previous
Monday, February 1, 2016
	CNY	Manufacturing PMI (Jan)		49.6	49.7
	CNY	Caixin Manufacturing PMI (Jan)		48.0	48.2
	EUR	German Manufacturing PMI (Jan)		52.1	52.1
	GBP	Manufacturing PMI (Jan)		51.8	51.9
	USD	ISM Manufacturing PMI (Jan)		48.0	48.2
Tuesday, February 2, 2016
	AUD	Interest Rate Decision (Feb)		2.00%	2.00%
	EUR	German Unemployment Change (Jan)		-7K	-14K
	GBP	Construction PMI (Jan)		57.6	57.8
Wednesday, February 3, 2016
	NZD	Employment Change (QoQ) (Q4)			-0.4%
	GBP	Services PMI (Jan)		55.4	55.5
	USD	ADP Nonfarm Employment Change (Jan)		195K	257K
	USD	ISM Non-Manufacturing PMI (Jan)		55.1	55.3
	USD	Crude Oil Inventories			8.383M
Thursday, February 4, 2016
	GBP	Interest Rate Decision (Feb)		0.50%	0.50%
Friday, February 5, 2016
	AUD	Retail Sales (MoM) (Dec)		0.5%	0.4%
	USD	Nonfarm Payrolls (Jan)		190K	292K
	USD	Unemployment Rate (Jan)		5.0%	5.0%
	CAD	Employment Change (Jan)		6.0K	22.8K
	CAD	Ivey PMI (Jan)		50.3	49.9