GBP/USD Fundamental Analysis – August 20, 2015 – Forecast

Analysis and Recommendations:

The GBP/USD added another 26 points to reach 1.5686 after inflation data yesterday showed a jump giving ammunition to the Bank of England. The greenback traded in the red helping push the pound.  The pound outperformed following hawkish comments from Bank of England official Kristin Forbes. A member of the rate-setting MPC committee, Forbes said the UK is in a “solid recovery” and warned that the benchmark policy rate will need to rise before headline inflation hits the target 2 percent. She added that keeping rates low for too long carries distortion risks.

The US Dollar likewise advanced, rising alongside prices for Treasury securities ahead of an auction of 3- and 6-month bills later in the day. The near-term tenor of the paper on offer suggests traders may get a sense of the markets’ Fed rate hike bets in the borrowing costs prevailing at the debt sale.

Signs of robust demand suggest investors are betting the central bank will prove to be relatively dovish, keeping rates low. While the greenback rose considering the assets on offer are denominated in USD terms, the move seems unlikely to have follow-through considering the longer-term negative implications of a more accommodative FOMC for the benchmark currency.

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.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday August 20, 2015

Government Bond Auctions

Date Time Country

Aug 19 11:30 Germany Eur 5bn Sep 2017 Schatz

Aug 19 11:03 Sweden Holds bond auction

Aug 20 10:30 Spain Auctions Bonos/Obligaciones

Aug 20 11:30 UK Auctions 4.25% 2036 Gilt

Aug 21 17:30 Italy Announces details of CTZ/BTPei on 26 Aug