GBP/USD Weekly Fundamental Analysis June 11-15, 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

 

Weekly Analysis and Recommendation:

The GBP/USD closed the week at 1.5472 on a negative note. Even with the USD losing momentum the sterling could not gain.

Date

Last

Open

High

Low

Change %

Jun 08, 2012

1.5472

1.5522

1.5525

1.5404

-0.32%

Jun 07, 2012

1.5522

1.5481

1.5600

1.5430

0.26%

Jun 06, 2012

1.5481

1.5384

1.5516

1.5376

0.63%

Jun 05, 2012

1.5384

1.5396

1.5409

1.5322

-0.08%

Jun 04, 2012

1.5396

1.5349

1.5416

1.5342

0.31%

For the first two days of the week, we did not see any drastic movement in the Pound as UK markets were closed, as the nation was celebrating its Diamond Jubilee. Later we saw pound reacting to the ECB meeting outcomes as the ECB officials were showing readiness to ease the crisis, thereby reducing the possible harm to the UK’s economy. UK’s construction PMI dropped during the week on account of decline in the business confidence. Country’s HPI data came in positive, which helped the currency to move higher thereby indicating improvement in the housing market conditions. Bank of England held a meeting during the week, wherein the officials decided to keep the bank rate unchanged at 0.5%. They made no changes in the stimulus program, thereby lifting the currency higher.  Now the market participants will be focusing on the minutes of the meeting, which will be published on 20th June 2012. GBP/USD closed at 1.54 levels, as compared to 1.5358 levels last week.

From across the pond a series of poor data last week (ended 1st June, 2012) in the form of rising unemployment rate and drop in the PMI had prompted the investors to rush towards US treasuries. The weak data made the market participants expect another round of monetary easing by the Fed to support the economy. This week we saw some positive economic data such as rise in the services PMI, encouraging the growth of the economy. Along with that we saw the Unemployment claims of the US falling, thereby reflecting positive signs of the labor market conditions.

Several FOMC members put forth their views regarding the state of the economy and future plans. They showed their readiness to take appropriate actions if the country needs boost at any point in time. Then came the significant speech by the Fed chairman Ben Bernanke, where he preferred to keep the market guessing about the QE3 till FOMC meet on June 19th-20th. Dollar Index closed at 82.78 levels, as compared to 82.79 levels last week.

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 of June 4 – 8 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

 Event

Actual

Forecast

Previous

Jun 5

USD

ISM Non-Manufacturing PMI

53.7

53.6

53.5

GBP

Construction PMI

54.4

54.5

55.8

Jun 6

EUR

Minimum Bid Rate

1.00%

1.00%

1.00%

CHF

Foreign Currency Reserves

303.8B

 

237.6B

Jun 7

CHF

CPI m/m

0.0%

0.1%

0.1%

GBP

Services PMI

53.3

52.6

53.3

EUR

Spanish 10-y Bond Auction

6.04|3.3

 

5.74|2.4

GBP

Asset Purchase Facility

325B

325B

325B

GBP

Official Bank Rate

0.50%

0.50%

0.50%

USD

Unemployment Claims

377K

381K

389K

GBP

PPI Input m/m

-2.5%

-1.2%

-1.4%

Jun 8

USD

Trade Balance

-50.1B

-49.4B

-52.6B

 

Historical:

Highest: 1.681 USD on Nov 17, 2009.

Average: 1.5807 USD over this period

Lowest: 1.3506 USD on Jan 23, 2009.

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

Date

Time

Currency

 Event

Forecast

Previous

Jun 11

6:45

EUR

French Industrial Production m/m

 

-0.9%

23:01

GBP

RICS House Price Balance

 

-19%

Jun 12

5:45

CHF

SECO Economic Forecasts

   

8:30

GBP

Manufacturing Production m/m

 

0.9%

14:00

GBP

NIESR GDP Estimate

 

0.1%

Jun 13

7:15

CHF

PPI m/m

 

-0.1%

9:00

EUR

Industrial Production m/m

 

-0.3%

Jun 14

7:30

CHF

Libor Rate

<0.25%

<0.25%

7:30

CHF

SNB Monetary Policy Assessment

   

7:30

CHF

SNB Press Conference

   

8:00

CHF

SNB Financial Stability Report

   

8:00

EUR

ECB Monthly Bulletin

   

9:00

EUR

CPI y/y

 

2.4%

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About: FX Empire Analyst - Barry Norman

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