GBP/USD Weekly Fundamental Analysis – May 16-20, 2016 -Forecast

The GBP/USD dipped as the US dollar strengthened this week. The pound dipped 0.35% to 1.4379. The U.S. dollar climbed against most major currencies as economic data from the country came out positive.

The U.S. Commerce Department reported on Friday that the advance estimates of U.S. retail and food services sales for April were 453.4 billion U.S. dollars, seasonally adjusted, an increase of 1.3 percent from the previous month, and 3 percent above April 2015.

The Producer Price Index for final demand rose 0.2 percent in April, seasonally adjusted, the U.S. Labor Department said Friday. Final demand declined 0.1 percent in March and 0.2 percent in February.

The index for final demand less foods, energy, and trade services moved up 0.3 percent in April following no change in March.

The Bank of England stepped up its warnings about the economic risks if Britain votes to leave the European Union, saying on Thursday that sterling could fall sharply and unemployment would probably rise.

The central bank also cut Britain’s growth forecast for this year to 2.0 percent from 2.2 percent in February, reflecting how uncertainty about next month’s referendum is already weighing on the economy.

The Bank’s rate setters – who voted unanimously to keep interest rates on hold – said households and companies were likely to hold off on spending and investment in the event of a vote for so-called Brexit on June 23.

Governor Mark Carney said the BoE would try to offset the potential hit to the economy but there were limits to what monetary policy could do.

“Monetary policy cannot immediately offset all the effects of a shock,” he told a news conference.

British finance minister George Osborne, who has tried to focus voters on what a Brexit would mean for their incomes, said the BoE assessment was a “clear and unequivocal warning” that leaving the EU would be a “lose-lose situation for Britain.”

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:

Upcoming Government Bond Auctions

Date Time Country 

May 13 12:00 Iceland Holds bond auction

May 18 11:30 Germany Eur 4bn Feb 2026 Bund

May 18 17:20 Sweden Announces details of bond auction on May 25

May 19 10:30 Spain Holds bond auction

May 19 11:03 Sweden Hold bond auction

May 19 11:50 France Holds bond auction

May 20 11:03 Sweden Sek 1.992bn 0.5% Jun 2017 I/L bond