GBP/USD Fundamental Analysis February 19, 2015 – Forecast

Analysis and Recommendations:

The GBP/USD soared 85 points to reach 1.5436 soaring after Bank of England minutes showed that all members supported the decision. Traders were expecting see a split between doves and hawks.  To add a cherry on top of the Sunday, UK unemployment fell to 5.7% unexpectedly and claimant count printed in the green.  The minutes also revealed that for the first time a third unnamed member said the next change to monetary policy was ‘roughly as likely’ to be a cut in interest rates rather than an increase. The most prominent advocate of looser monetary policy in the past has been David Miles.

The minute’s follows last week’s inflation report from the Bank, which raised the possibility that it could cut interest rates below 0.5 per cent if inflation turns out weaker than expected, and drops into negative territory. Previously MPC members Martin Weale and Ian McCafferty had dissented and voted to increase rates from August through to December. The minutes showed all members of the MPC thought it was likely that rates would rise over the next three years.

Inflation has been the major talking point of late among economists in the UK. Last month it fell to 0.3 percent, its lowest level since records began in 1989 and far below the Bank’s 2 per cent target. The Bank has forecast a dip below zero for later this year. But Bank Governor Mark Carney believes this will be short-lived and inflation will probably pick up and move closer to its 2 per cent target from next year.

Data showed British pay growth far outstripped inflation in December and the jobless rate fell.

Average weekly earnings, including bonuses, rose 2.4 percent in annual terms in December, well above inflation of 0.5 percent and picking up from November. The Office for National Statistics also said Britain’s unemployment rate fell to 5.7 percent, its lowest level in more than six years.

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 actual vs. forecast:

 

Upcoming Economic Events that you should be monitoring:

Thursday, February 19^th

Government Bond Auctions

Date                   Country

Feb 19                Spain Auctions

Feb 19                France Auctions BTANs

Feb 19                France Auctions

Feb 19                Italy Announces details

Feb 19                US Announces 2-yr FRN, plus 2/5/7 Notes

Feb 19                US Auctions 30-yr TIPS