GBP/USD Weekly Fundamental Analysis June 11-15, 2012, Forecast

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.

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 20^th 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

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