GBP/USD Fundamental Analysis – August 24, 2015 – Forecast

Analysis and Recommendations:

The GBP/USD dipped 20 points against a very weak US dollar to trade at 1.5670 as both currencies were plagued with doubts about central bank action in the near term.  Investors expect the U.S. Federal Reserve to raise rates before the BoE, but minutes from the Fed’s latest meeting, released late on Wednesday, showed policymakers worrying that lagging inflation and a weak global economy posed risks too big to commit to “lift-off.”

Investors reckon the BoE will start hiking rates from their historic lows in early 2016 as the UK economy continues to pick up speed. That expectation carried the pound to a 7 1/2-year high on a trade-weighted basis earlier in the week. But the latest data suggests there should be no hurry.

BoE rate-setter Kristin Forbes said on Sunday that rates would need to rise long before inflation hits the BoE’s 2 per cent target. Leaving them low for too long, she said, would risk undermining Britain’s economic recovery.

Data released on Friday showed that Britain’s public sector finances were also improving, another sign that the economy was picking up. Britain’s public finances recorded their first July surplus in three years, driven by the strongest tax receipts for the month since records began in 1997.

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.

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Monday, August 24, 2015