GBP/USD Fundamental Analysis August 22, 2013 Forecast

Analysis and Recommendations:

The GBP/USD climbed today to trade at 1.5691 with the possibility of breaking above the 1.57 price as the UK currency remains strong after weeks of supportive data and a strong stance from the Bank of England. U.K. net borrowing excluding temporary support for banks was 488 million pounds compared with a surplus of 823 million pounds a year earlier, the Office for National Statistics said. Including coupon cash received from the Bank of England on its holdings of gilts, the deficit was 62 million pounds.

The pound has gained 0.3 percent this year after earlier dropping as much as 6.9 percent, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The euro rose 6.2 percent and the dollar strengthened 4.5 percent. The U.K. economy is showing signs of strengthening, with indexes of manufacturing, services and construction all improving in July and house prices rising amid the strongest property market since the financial crisis.

Gross domestic product increased 0.6 percent in the second quarter, according to the median forecast of 34 analysts in a Bloomberg News survey before the Office for National Statistics publishes the data on Friday. That’s in line with an earlier reading released on July 25. The U.K. currency strengthened against 12 of its 16 major counterparts even as a report showed Britain posted its first July budget deficit since 2010 as government spending increased.

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Economic Data August 21, 2013 actual v. forecast

 

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