GBP/USD Weekly Fundamental Analysis Jan. 23-27, 2012, Forecast

GBP/USD Weekly Fundamental Analysis Jan. 23-27, 2012, Forecast

Economic Events (GMT)

Please review the daily forecast for explanations and expected results

Jan. 24

20:00 GBP BoE Gov King Speaks

Jan. 25

09:30 GBP GDP (QoQ) -0.1% 0.6%

09:30 GBP MPC Meeting Minutes

19:15 USD Interest Rate Decision 0.25% 0.25%

19:15 USD FOMC Statement

Jan. 26

13:30 USD Core Durable Goods Orders (MoM) 0.9% 0.3%

13:30 USD Initial Jobless Claims 370K 352K

15:00 USD  New Home Sales 320K 315K

Jan. 27

13:30 USD GDP (QoQ) 3.0% 1.8%

Historical:

Highest: 1.681 USD on 17 Nov 2009.

Average: 1.5807 USD over this period.

Lowest: 1.4321 USD on 19 May 2010.

Rule:

GBP/USD: 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. Easy  to trade against the USD.

Characteristics
Average broker spread: 4-5 pips
Daily range average: 150-200 pips
Best time to trade: Euro Session (0700 GMT – 1700 GMT)
Some factors affecting the GBP/USD rate:

• 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

Trading the GBP/USD 

Trading Experience: Expert currency traders
Trading Style: Day trading and Swing trades

How to trade? 

Applying Technical Analysis and/or Analyzing Fundamental News from the UK and US zone to make GBP/USD trading decisions. Watch out for false break outs. Surprising economic news releases can make the GBP/USD move a lot in one direction without much retracement.

Analysis and Recommendation:

The GBP/USD was up and down all week, with positive jobs reports and negative housing data, but moved up against all currencies. The UK economic reports on jobless claims showed more and more claimants, putting pressure on the sterling. Inflation showed to be easing, but this was expected with changes on the VAT tax application. Earlier as the US dollar showed weakness we saw the Sterling soar, but as Friday progressed, the USD regained strength pushed the GBP down. The pound regained strength as the weekend concluded currently trading at 1.5576

The entire week seemed to be focused on Greece and the negotiations with the IIF representatives as deadlines approached. There were rumors flying in every direction, moving the markets but at the close of day Friday no deal had been reached and the IIF representatives packed up and went home stating the negotiations would continue over the week by phone.

Keep an eye on Gold, as it surged on Friday as investors moved to safe-havens. This week will be about safety and risk appetite.

As of this writing, there have been no final agreements on Greece and the EU meetings are scheduled for tomorrow. It looks more and more like a Greece default or intervention by the ECB or the IMF.

Upcoming Govt Bond Sales Dates

Jan 23  10:10  Norway  Nok 6.0bn 4.25% May 2017 bond

Jan 23  10:10  Slovakia  Auctions Apr 2014 bond

Jan 23  10:30  Germany  Eur 3.0bn Jan 2013 Bubill

Jan 23  12:00  Norway  Details bond auction on Jan 30

Jan 24  09:30  Netherlands Eur 1.5-2.5bn Jan 2013 & Jan 2042 DSL

Jan 24  09:30  Spain  Auctions 3 & 6M T-bills

Jan 24  16:30  Italy   Details CTZ/BTPei on Jan 26 & BOT on Jan 27 &

Jan 24  18:00  US  Auctions 2Y Notes

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction