GBP/USD Weekly Fundamental Analysis – Week of May 23, 2016

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Published: May 21, 2016, 07:31 UTC

The GBP/USD will begin the week at 1.4514 after trading above the 1.46 level this week as data was better than expected and Brexit polls returned to the

GBP/USD Weekly Fundamental Analysis – Week of May 23, 2016

The GBP/USD will begin the week at 1.4514 after trading above the 1.46 level this week as data was better than expected and Brexit polls returned to the IN outcome. The pound saw a gain of 1.06% over the week. The dollar was little changed on Friday, holding gains against the euro while rising against the yen as a G7 finance meeting kicked off in northern Japan.

The two days of talks may highlight a sharp divide among the club of rich nations over how to rev up global growth, as host Japan seeks to win an endorsement for its position that fiscal stimulus is the way to lift global economic growth.

On Friday, investors also weighed the global economic impact of a possible US rate increase as early as June, analysts said. Hawkish minutes from the Federal Reserve’s most recent meeting, as well as solid data from the world’s top economy – including last week’s better-than-expected US consumer spending figures for April – have fueled talk of another hike in interest rates.

A robust UK retail sales report for April, along with growing expectations that Britain will vote to stay in the European Union in a referendum on June 23, boosted the currency this week.

Sterling strengthened to 76.485 pence per euro on Thursday, its strongest since early February, but on Friday eased back about 0.6 percent to 77.235 pence. That still left it up more than 2 percent on the week.

Worries about a possible Brexit have weighed on the pound since late last year. Trade-weighted sterling shed 11 percent between mid-November and early April, when it hit a 2 1/2-year low. Since then it has recovered over 5 percent.

Sterling was also hurt a little by dovish comments from a Bank of England policymaker. Gertjan Vlieghe, a noted dove, said on Thursday that the BOE needed to provide more stimulus if growth failed to recover as forecast after the referendum.

But another policymaker, Kristin Forbes, said the central bank had no concrete evidence that softer British data was all down to uncertainty around June’s Brexit vote.

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:


	Cur.	Event	Actual	Forecast	Previous
Monday, May 23, 2016
		Canada – Victoria Day
Tuesday, May 24, 2016
	USD	New Home Sales (Apr)		523K	511K
Wednesday, May 25, 2016
	CAD	Interest Rate Decision		0.50%	0.50%
	USD	Crude Oil Inventories			1.310M
Thursday, May 26, 2016
	GBP	GDP (QoQ) (Q1)		0.4%	0.4%
	GBP	GDP (YoY) (Q1)		2.1%	2.1%
	USD	Core Durable Goods Orders (MoM) (Apr)		0.3%	-0.2%
	USD	Pending Home Sales (MoM) (Apr)		0.6%	1.4%
Friday, May 27, 2016
	USD	GDP (QoQ) (Q1)		0.9%	0.5%