GBP/USD Weekly Fundamental Analysis October 22-26, 2012 Forecast

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GBP/USD Weekly Fundamental Analysis October 22-26, 2012 Forecast

GBP/USD Weekly Fundamental Analysis October 22-26, 2012 Forecast

Weekly Analysis and Recommendation:

The GBP/USD closed the week at 1.6006 having hit a high for the week at 1.6116 after a few positive eco reports lifted the currency. Unemployment dropped from 8.1% to 7.9% unexpectedly while jobs climbed, also retail sales reported well above forecast. This week its it 3rd quarter GDP numbers, which traders are hoping will report much better for the UK. The UK economic recovery is still suspicious and traders are not sure if some random reports are all that is needed. The BoE is expected to increase its stimlus package either through existing programs or new.

Date

Last

Open

High

Low

Change %

Oct 19, 2012

1.6006

1.6054

1.6067

1.5998

-0.31%

Oct 18, 2012

1.6056

1.6135

1.6171

1.6042

-0.49%

Oct 17, 2012

1.6135

1.6126

1.6178

1.6116

0.06%

Oct 16, 2012

1.6126

1.6080

1.6135

1.6062

0.29%

Oct 15, 2012

1.6080

1.6057

1.6081

1.6022

0.14%

Markets expect that UK GDP (to be reported on October 25th) rebounded strongly during the third quarter, advancing 0.7% q/q. There are likely to be two key areas of support. Firstly, the bounce back from the lost output during the second quarter that resulted from the extra bank holiday. The monthly output data for July have already confirmed this occurrence, and the boost should be worth around half a percentage point. Secondly, there is likely to be a lift from the London Summer Olympics. The Office for National Statistics (ONS) has already highlighted that the ticket sales will raise quarterly household consumption growth by 0.1 percentage point. We also suspect that the wider boost of the games (i.e. tourism spending, transport, etc.) should add at least the same amount again. Stripping away the noise around the headline print, we believe that the pace of underlying GDP growth is around 0.3% q/q. This isn’t particularly good, but nor is it that bad. We believe that trend GDP growth in the UK is around 1.5%, so a 1.2% annualized growth rate is rather close to trend, albeit somewhat lackluster. Monetary policy is accommodative, fiscal policy is restrictive and external demand is fragile amidst the euro zone debt crisis

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 October 15-19, 2012 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

Event

Actual

Forecast

Previous

Oct. 15

GBP

Rightmove House Price Index (MoM) 

3.5%

 

-0.6%

 

CHF

PPI (MoM) 

0.3%

0.2%

0.5%

 

USD

Core Retail Sales (MoM) 

1.1%

0.6%

1.0%

 

USD

Retail Sales (MoM) 

1.1%

0.8%

1.2%

 

USD

NY Empire State Manufacturing Index 

-6.2

-4.5

-10.4

Oct. 16

GBP

Core CPI (YoY) 

2.1%

2.1%

2.1%

 

GBP

CPI (YoY) 

2.2%

2.2%

2.5%

 

GBP

PPI Input (MoM) 

-0.2%

-0.1%

1.9%

 

GBP

CPI (MoM) 

0.4%

0.4%

0.5%

 

GBP

PPI Input (YoY) 

-1.2%

-0.8%

1.1%

 

EUR

CPI (YoY) 

2.6%

2.7%

2.7%

 

EUR

German ZEW Economic Sentiment 

-11.5

-15.0

-18.2

 

EUR

ZEW Economic Sentiment 

-1.4

-1.1

-3.8

 

EUR

Core CPI (YoY) 

1.5%

1.6%

1.5%

 

USD

Core CPI (MoM) 

0.1%

0.2%

0.1%

 

USD

CPI (MoM) 

0.6%

0.5%

0.6%

 

USD

CPI (YoY) 

2.0%

1.9%

1.7%

 

USD

Core CPI (YoY) 

2.0%

2.0%

1.9%

 

USD

TIC Net Long-Term Transactions 

90.0B

45.3B

67.2B

 

USD

Industrial Production (MoM) 

0.4%

0.2%

-1.4%

Oct. 17

GBP

Average Earnings Index +Bonus 

1.7%

1.6%

1.6%

 

GBP

Claimant Count Change 

-4.0K

-1.0K

-14.2K

 

USD

Building Permits 

0.894M

0.810M

0.801M

 

USD

Housing Starts 

0.872M

0.770M

0.758M

 Oct. 18

GBP

Retail Sales (MoM) 

0.6%

0.4%

-0.1%

 

GBP

Retail Sales (YoY) 

2.5%

2.1%

2.5%

 

EUR

Spanish 10-Year Obligation Auction 

5.458%

 

5.666%

 

USD

Initial Jobless Claims 

388K

365K

342K

 

USD

Continuing Jobless Claims 

3252K

3275K

3281K

 

USD

Philadelphia Fed Manufacturing Index 

5.7

1.0

-1.9

Oct. 19 

USD

Existing Home Sales 

4.75M

4.75M

4.83M

Historical: From 2010 to Present

Highest: 1.6747 USD on April 28, 2011.

Average: 1.5751 USD over this period

Lowest: 1.4229 USD on May 20, 2010.

 

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

Date

Time

Currency

Event

Forecast

Previous

Oct. 24 

07:58

EUR

French Manufacturing PMI 

44.0 

42.7 

 

08:28

EUR

German Manufacturing PMI 

48.0 

47.4 

 

09:00

EUR

German Ifo Business Climate Index 

101.6 

101.4 

 

09:00

EUR

German Current Assessment 

109.7 

110.3 

 

09:00

EUR

German Business Expectations 

94.3 

93.2 

 

11:00

GBP

CBI Industrial Trends Orders 

 

-8 

 

15:00

USD

New Home Sales

385K

373K

Oct.26 

07:00

EUR

GfK German Consumer Climate 

5.9 

5.9 

 

08:00

CHF

KOF Leading Indicators 

1.67 

1.67 

Government Bond Auction

Date Time Country 

Oct 22 09:10 Norway 

Oct 23 08:30 Spain 

Oct 23 14:30 UK 

Oct 23 17:00 US 

Oct 24 09:10 Sweden 

Oct 24 09:30 Germany 

Oct 24 14:30 Sweden 

Oct 24 15:30 Italy  

Oct 24 16:30 US 

Oct 25 00:30 Japan 

Oct 25 09:10 Sweden 

Oct 25 15:30 Italy  

Oct 25 17:00 US 

Oct 26 09:10 Italy

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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