GBP/USD Fundamental Analysis – January 7, 2016 – Forecast

Analysis and Recommendations:

The GBP/USD tumbled 16 points to trade at 1.4655 after the release of lackluster services PMI data released today. The Markit suggested that service sector growth in the UK stabilized at a solid pace in December, supported by an increase in new business as firms reported successful marketing campaigns. Markit reported that December saw the strongest rise in average input prices in the service sector in five months, mainly linked to wages, but input price inflation remained historically low. This stands in line with Monday’s report in which Markit commented that the ongoing mix of subdued growth and weak price pressures may push any potential rate increase by the BoE later into 2016.

Looking further into the report, Markit had some interesting comments. Markit remarked that the survey signaled a 0.5% growth rate in Q4, which would lead to GDP rising 2.2% in 2015. The services sector helped offset the recent weakness in manufacturing, putting the economy on pace for a 2-2.5% growth in 2016. With that being said, Markit signaled downside risks to economic growth in 2016 as the cost impact of the living wage, government spending cuts, the possibility of a rate hike, weaker global economic growth and the possibility of a ‘Brexit’. However, with the report generally in line with expectations, the British Pound was little changed.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, January 7, 2016

Government Bond Auctions

Date Time and Country

Jan 07 10:50 France Holds bond auction

Jan 07 11:30 UK GBP1.5bn 4% Jan 2060 Gilt

Jan 07 n/a US Announces details of 3-yr note auction on Jan 12

Jan 07 n/a US Announces details of 10-yr note auction on Jan 13

Jan 07 n/a US Announces details of 30-yr bond auction on Jan 14

Jan 08 17:20 Italy Announces details of BTP/

Jan 11 12:00 Norway Announces details of bond auction on Jan 13

Jan 12 11:00 Austria Holds bond auction

Jan 12 11:00 Netherlands Euro 1-1.5bn 2.5% 2033 DSL

Jan 12 11:30 UK 0.125% 2046 Inflation-linked Gilt

Jan 12 n/a UK Announces details of Gilt auction on Jan 20

Jan 12 19:00 US Holds 3-year note auction

Jan 13 11:05 Norway Holds bond auction

Jan 13 11:10 Italy Holds BTP

Jan 13 11:30 Germany Euro 5bn Feb 2026 Bund

Jan 13 19:00 US Holds 10-year note auction

Jan 14 10:30 Spain Auctions Bonos/Obligaciones (Linkers?)

Jan 14 19:00 US Holds 30-year bond auction

Jan 14 n/a US Announces details of 10-yr TIPS auction on Jan 21

Jan 18 11:00 Belgium Holds OLO auction