GBP/USD Weekly Fundamental Analysis September 24-28, 2012 Forecast

Posted September 22, 2012 7:10 (GMT) | By FX Empire Analyst - Barry Norman | Print | Font Size
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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 1.6228 after breaking to test 1.63 following positive UK data and rumors of EUR buying by a Middle Eastern Sovereign fund, causing USD weakness.

Date	Last	Open	High	Low	Change %
Sep 21, 2012	1.6228	1.6222	1.6310	1.6213	0.04%
Sep 20, 2012	1.6222	1.6232	1.6236	1.6164	-0.06%
Sep 19, 2012	1.6232	1.6244	1.6271	1.6185	-0.07%
Sep 18, 2012	1.6244	1.6241	1.6267	1.6222	0.02%
Sep 17, 2012	1.6241	1.6223	1.6274	1.6212	0.11%

UK Public Sector borrowing came in at £12.362Bln against expectations of £13.3Bln this morning. Alongside speculation of Middle Eastern EUR buying there has also been commentary from the ECB’s Liikanen who has said that if necessary the OMT can cover the whole Eurozone, further contributing to the recent burst of USD weakening. This morning saw the week’s third test of 1.627, so the eventual move higher likely was aided by some stops being triggered. Price has currently made a high at 1.6309 representing the high since August 2011. The final UK Q2 GDP revisions will round out the hits.

This week saw UK retail sales report well above forecast as well as other eco data supporting a recovery in the UK. The GBP is expected to remain strong.

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 September 17-21, 2012 actual v. forecast for Euro, GPB, the Franc, and USD

Date	Currency	Event	Actual	Forecast	Previous
Sep. 17	GBP	Rightmove House Price Index (MoM)	-0.6%		-2.4%
	USD	NY Empire State Manufacturing Index	-10.4	-2.0	-5.8
Sep. 18	GBP	Core CPI (YoY)	2.1%	2.2%	2.3%
	GBP	CPI (YoY)	2.5%	2.5%	2.6%
	GBP	CPI (MoM)	0.5%	0.5%	0.1%
	EUR	German ZEW Economic Sentiment	-18.2	-19.0	-25.5
	EUR	ZEW Economic Sentiment	-3.8	-16.5	-21.2
	USD	Current Account	-117.4B	-125.5B	-133.6B
	USD	TIC Net Long-Term Transactions	67.0B	45.3B	9.3B
Sep. 19	USD	Building Permits	0.803M	0.796M	0.811M
	USD	Housing Starts	0.750M	0.765M	0.733M
	USD	Existing Home Sales	4.82M	4.55M	4.47M
Sep. 20	EUR	French Manufacturing PMI	42.6	46.4	46.0
	EUR	German Manufacturing PMI	47.3	45.3	44.7
	EUR	Manufacturing PMI	46.0	45.4	45.1
	GBP	Retail Sales (MoM)	-0.2%	-0.4%	0.3%
	GBP	Retail Sales (YoY)	2.7%	2.7%	2.3%
	EUR	Spanish 10-Year Obligation Auction	5.666%		6.647%
	GBP	CBI Industrial Trends Orders	-8	-15	-21
	USD	Initial Jobless Claims	382K	375K	385K
	USD	Continuing Jobless Claims	3272K	3300K	3304K
	USD	Philadelphia Fed Manufacturing Index	-1.9	-4.0	-7.1

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

Date	Time	Currency	Event	Forecast	Previous
Sep. 24	09:00	EUR	German Ifo Business Climate Index	102.3	102.3
	09:00	EUR	German Current Assessment	110.9	111.2
	09:00	EUR	German Business Expectations	95.0	94.2
Sep. 25	07:00	EUR	GfK German Consumer Climate	5.9	5.9
	15:00	USD	CB Consumer Confidence	62.0	60.6
Sep. 26	01:00	EUR	German CPI (MoM)	-0.1%	0.4%
	01:00	EUR	German CPI (YoY)	2.0%	2.1%
	11:00	GBP	CBI Distributive Trades Survey	5	-3
Sep. 27	08:55	EUR	German Unemployment Rate	6.8%	6.8%
	08:55	EUR	German Unemployment Change	10K	9K
	09:30	GBP	Current Account	-12.4B	-11.2B
	09:30	GBP	GDP (QoQ)	-0.5%	-0.5%
	09:30	GBP	GDP (YoY)	-0.5%	-0.5%
Sep. 28	07:45	EUR	French Consumer Spending (MoM)	-0.2%	0.1%
	08:00	CHF	KOF Leading Indicators	1.55	1.57

Government Bond Auction

Date Time Country

Sep 24 09:10 Norway

Sep 24 09:30 Germany

Sep 24 10:00 Belgium

Sep 24 15:30 Italy

Sep 25 08:30 Holland

Sep 25 08:30 Spain

Sep 25 09:10 Italy

Sep 25 14:30 UK

Sep 25 17:00 US

Sep 26 09:10 Italy

Sep 26 09:10 Sweden

Sep 26 09:00 Germany

Sep 26 14:30 Sweden

Sep 26 17:00 US

Sep 27 00:30 Japan

Sep 27 09:10 Italy

Sep 27 17:00 US

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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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