GBP/USD Fundamental Analysis – November 6, 2015 – Forecast

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Published: Nov 5, 2015, 12:51 UTC

Analysis and Recommendations: The GBP/USD drifted down 6 points after the Bank of England meeting and decision to hold rates and policy. The hawkish

GBP/USD Fundamental Analysis – November 6, 2015 – Forecast

Analysis and Recommendations:

The GBP/USD drifted down 6 points after the Bank of England meeting and decision to hold rates and policy. The hawkish attitude from the members should be supporting the pound but it is difficult to make headway against the strong US dollar after Janet Yellen more or less assured markets that a rate increase would happen in December. The pound is trading at 1.5381. Bank of England Governor Mark Carney published the central bank’s latest forecasts for the British economy and the outlook for interest rates at its quarterly inflation report. He recently said the decision as to when to start raising rates ‘will likely come into sharper relief around the turn of this year’.

Britain was the fastest-growing economy in the G7 in 2013 and 2014 but growth slowed over the summer – leading many to believe that rates would not rise until late 2016 or even 2017. But a flurry of figures published this week – including a rebound in manufacturing and the services sector – suggested the recovery has gained pace once again.

Research group Markit said its index of activity across the UK economy, where scores above 50 indicate growth, recovered from a two-and-a-half year low of 53.9 in September to 55.7 in October.

Chris Williamson, chief economist at Markit, said the economy is on course to grow by 0.6 per cent in the final quarter of this year after the rate of expansion slowed from 0.7 per cent in the second quarter to 0.5 per cent in the third.

‘The faster rate of expansion raises the possibility of an interest rate hike before the end of the year,’ he added.

Howard Archer, chief UK economist at IHS Global Insight, said the figures ‘reinforce our belief that the Bank of England will hike interest rates from 0.5 per cent to 0.75 per cent sometime in the first half of 2016’.

The National Institute of Economic and Social Research said it expects rates to rise to 0.75 per cent in February 2016 before edging up slowly to 2 per cent by the end of 2018.

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:

Cur.	Event	Actual	Forecast	Previous
AUD	RBA Governor Stevens Speaks
JPY	Monetary Policy Meeting Minutes
USD	FOMC Member Stanley Fischer
AUD	RBA Assist Gov Lowe Speaks
EUR	German Factory Orders (MoM) (Sep)	-1.7%	1.0%	-1.8%
GBP	Halifax House Price Index (MoM) (Oct)	1.1%	0.6%	-0.9%
GBP	Halifax House Price Index (YoY) (Oct)	9.7%	9.5%	8.6%
EUR	ECB Economic Bulletin
EUR	Retail Sales (MoM) (Sep)	-0.1%	0.2%	0.0%
EUR	ECB President Draghi Speaks
GBP	BoE QE Total (Nov)	375B	375B	375B
GBP	Interest Rate Decision (Nov)	0.50%	0.50%	0.50%
GBP	BoE Gov Carney Speaks
USD	FOMC Member Dudley Speaks

Upcoming Economic Events that you should be monitoring:

Friday, November 6, 2015

Cur.	Event	Actual	Forecast	Previous
AUD	Monetary Policy Meeting Minutes
JPY	BoJ Governor Kuroda Speaks
EUR	German Industrial Production (MoM)		0.5%	-1.2%
GBP	Halifax House Price Index (MoM)		-0.7%	-0.9%
GBP	Industrial Production (MoM) (Sep)		-0.1%	1.0%
GBP	Manufacturing Production (MoM)		0.4%	0.5%
GBP	Trade Balance (Sep)		-10.60B	-11.15B
USD	FOMC Member Bullard Speaks
USD	Average Hourly Earnings (MoM) (Oct)		0.2%	0.0%
USD	Nonfarm Payrolls (Oct)		180K	142K
USD	Private Nonfarm Payrolls (Oct)		165K	118K
USD	Unemployment Rate (Oct)		5.1%	5.1%
GBP	NIESR GDP Estimate		0.6%	0.5%
USD	Baker Hughes U.S. Rig Count			578