GBP/USD Fundamental Analysis – August 26, 2015 – Forecast

Analysis and Recommendations:

The GBP/USD ended the day flat at 1.5778 taking advantage of the drastic fall of the US dollar. The pound is also benefitting from safe haven trades as investors try to find places to park funds. Sterling managed quite a decent performance today both against the euro and the dollar even as there were no UK eco data. The euro corrected gradually further off yesterday’s highs and this move was also visible in EUR/GBP. The pair traded in the 0.7350 area at the start of the European trading session and dropped below the 0.73 barrier after the PBOC easing. At the same time, cable held near the recent highs in the low 1.58/high 1.57 area even as the dollar was better bid across the board. The pair currently trades near the intraday low in the 1.5755/60 area, but still a good performance of the UK currency given the price moves in other euro and USD cross rates.

Sterling recovered from a one-month low against a basket of currencies on Tuesday, helped by robust gains against the euro, but it underperformed the dollar as investors grew unsure about the timing of an expected rate rise by the Bank of England.

Money markets have pushed out the timing of when the BOE will raise rates to around the third quarter of next year compared with early 2016 when the central bank published its quarterly inflation report three weeks ago.

Fears of a slowdown intensified in recent days after China devalued its currency and data pointed to further signs of weakness. These factors have deepened a sell-off in Chinese stocks and triggered volatility in global stock markets.

China’s central bank responded with rate cuts and relaxation in reserve requirements on Tuesday, but given the sharp swings across asset classes and a highly uncertain global outlook, investors are questioning whether the Fed and the BoE can tighten policy in coming months.

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:

Wednesday, August 26, 2015

Government Bond Auctions

Date Time Country

Aug 25 00:00 UK Announces details of Jan 2021 gilt

Aug 25 17:30 Italy Announces details of BTP/CCTeu on 28 Aug

Aug 25 19:00 US Holds 2-year note auction

Aug 26 11:10 Italy Eur 3bn 0.15% Aug 2017 CTZ

Aug 26 19:00 US Holds 2-year FRN note auction

Aug 26 12:05 Norway Holds bond auction

Aug 26 19:00 US Holds 5-year note auction

Aug 26 19:00 US Holds 2-year FRN auction

Aug 27 11:03 Sweden Sek 0.5bn 0.125% I/L Jun 2019, Sek 0.5bn 1% Jun 2025 bonds

Aug 27 19:00 US Holds 7-year note auction

Aug 28 11:10 Italy Auctions BTPs/CCTeus

Sep 01 11:15 Austria Holds RAGB bond sale

Sep 01 00:00 UK Announces details of 3.5% 2045 Gilt

Sep 02 11:03 Sweden Holds bond auction

Sep 02 11:30 Germany Eur 4bn 0.25% Oct 2020 Bobl

Sep 02 11:30 UK Auctions new Jan 2021 Gilt

Sep 03 10:30 Spain Auctions Bonos/Obligaciones

Sep 03 11:10 France Auctions OATs

Sep 03 00:00 US Announces details of 3yr note on 08 Sep, 10yr note on 09 Sep

Sep 03 00:00 US Announces details of 10-year note on 09 Sep