GBP/USD Fundamental Analysis – August 21, 2015 – Forecast

Analysis and Recommendations:

The GBP/USD tumbled 51 points to 1.5629 after a lackluster retail sales print. David Kern at the British Chambers of Commerce described annual sales growth as “very strong”, but said the monthly figure was “a reminder that the recovery is still fragile.

“Given that falling store prices show deflation in the retail sector, we believe that the clamor in some quarters for early interest rate increases is premature”. The consensus for a rise in interest rates is early next year, but some economists have called for a rise this year to give rates time to have an impact on the real economy.

“British consumers are feeling confident in their spending,” said Naeem Aslam, chief market analyst at Avatrade Ltd. in Dublin. However, as the retail numbers weren’t as “bullish” as expected, they’re “not going to push the rate hike expectations that much. Hence we are not seeing the sterling soaring on the back of this,” he said.

From a year earlier, retail sales excluding fuel rose 4.3 percent in July.

On the month, sales of household goods rose 3.6 percent, the most since October, and department stores gained 1.6 percent, helped by in-store promotions. Food sales fell 0.2 percent. Sales of clothing and footwear dropped 1.5 percent.

Prices as measured by the retail-sales deflator fell an annual 3 percent in July, the same as in June. The deflator excluding fuel was minus 2 percent, bringing the stretch of negative figures to 13 months, the longest since 2006.

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:

Friday, August 21, 2015

Government Bond Auctions

Date Time Country

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