GBP/USD Weekly Fundamental Analysis May 28 – June 1, 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 ended the week at1.5667 as it is underperforming its peers ending a week in which it has declined 1.0% vs the USD.   Recent data, which included moderate CPI, weak retail sales, and deteriorating GDP figures, suggest a more challenging environment for the UK, and have raised the possibility of additional easing from the BoE.    Yesterday, the BoE’s David Miles (the only MPC member to have recently voted for additional asset purchases) commented that QE remains an effective tool for policymakers. With the revision of the GDP downwards, markets reacted negatively, when the GDP was announced several weeks ago and the UK went into a technical recession, markets had little reaction.

Highest: 1.5848

Lowest: 1.5631

Difference: 0.0217

Average: 1.5718

Change %: -1.02

This week with the global worries and the drop in growth and the negative statements from the IMF and the OECD, markets moved away from the sterling.

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 up to the data analysis and information in our weekly reports.

Major Economic Events for the week of May 21-25 actual v. forecast for Euro, GPB, and the Franc

Currency

 

Actual

Forecast

Previous

GBP

CPI y/y

3.0%

3.1%

3.5%

GBP

Public Sector Net Borrowing

-18.8B

-8.5B

14.6B

GBP

MPC Meeting Minutes

0-0-9

0-0-9

0-0-9

GBP

Retail Sales m/m

-2.3%

-0.8%

2.0%

EUR

German Flash Manufacturing PMI

45.0

47.1

46.2

EUR

German Ifo Business Climate

106.9

109.4

109.9

GBP

Revised GDP q/q

-0.3%

-0.2%

-0.2%

 Historical:

Highest: 1.681 USD on 17 Nov 2009.

Average: 1.5807 USD over this period

Lowest: 1.3506 USD on 23 Jan 2009.

 

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

Date

Time

Currency

 

Previous

May 28

28th-31st

GBP

Nationwide HPI m/m

-0.2%

May 29

All Day

EUR

German Prelim CPI m/m

0.2%

14:00

USD

CB Consumer Confidence

69.2

May 30

7:00

CHF

KOF Economic Barometer

0.40

8:00

EUR

M3 Money Supply y/y

3.2%

8:30

GBP

Net Lending to Individuals m/m

1.4B

14:00

USD

Pending Home Sales m/m

4.1%

23:01

GBP

GfK Consumer Confidence

-31

May 31

5:45

CHF

GDP q/q

0.1%

31st-3rd

EUR

German Retail Sales m/m

0.8%

6:45

EUR

French Consumer Spending

-2.9%

7:55

EUR

German Unemployment

19K

9:00

EUR

CPI Flash Estímate y/y

2.6%

12:15

USD

ADP Non-Farm Employment

119K

12:30

USD

Prelim GDP q/q

2.2%

12:30

USD

Unemployment Claims

370K

13:45

USD

Chicago PMI

56.2

Jun 1

TBD

GBP

Halifax HPI m/m

 

7:15

CHF

Retail Sales y/y

4.2%

7:30

CHF

SVME PMI

46.9

7:45

EUR

Italian Manufacturing PMI

43.8

8:30

GBP

Manufacturing PMI

50.5

9:00

EUR

Unemployment Rate

10.9%

12:30

USD

Non-Farm Employment Change

115K

12:30

USD

Unemployment Rate

8.1%

12:30

USD

Core PCE Price Index m/m

0.0%

12:30

USD

Personal Spending m/m

0.2%

12:30

USD

ISM Manufacturing PMI

0.3%

14:00

USD

S&P/CS Composite-20 HPI y/y

54.8

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About: FX Empire Analyst - Barry Norman

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