GBP/USD Fundamental Analysis October 15, 2014 Forecast

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Updated: Aug 25, 2015, 00:00 UTC

Analysis and Recommendations: The GBP/USD tumbled 129 points to trade at 1.5956 after inflation missed expectations and the BRC retail sales report

GBP/USD Fundamental Analysis October 15, 2014 Forecast

Analysis and Recommendations:

The GBP/USD tumbled 129 points to trade at 1.5956 after inflation missed expectations and the BRC retail sales report printed well below forecast. Even UK PPI missed forecast casting a shadow on the UK recovery. Sterling took another hit from an unexpected fall in the BRC indicator of retail sales, down 2.1 per cent year on year compared with expectations of a 1.0 per cent rise.

Concern over growth has already driven back expectations for a rise in UK interest rates well into next year. Some analysts who only weeks ago were talking up a rise next month are now admitting it may not come until the second half of next year.

Inflation is on something of a downward march at the moment, falling even further below the Bank of England’s target 2% rate to 1.2% in September, compared to 1.5% in August. That’s the lowest level since September 2009 and a far cry from three years ago when it hit 5%.

Traders bet that the Bank of England will wait longer than previously expected to raise interest rates from their record, 67-month low of 0.5%.

The pressure does increasingly look like it’s easing on Mark Carney and the Monetary Policy Committee, particularly as falling inflation will be a welcome respite to the average worker, with real wage growth stagnating

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:

Cur.	Event	Actual	Forecast	Previous
GBP	BRC Retail Sales Monitor (YoY) (	-2.1%	1.0%	1.3%
AUD	NAB Business Confidence (Sep)	5		7
EUR	French CPI (MoM) (Sep)	-0.4%	-0.3%	0.4%
EUR	French HICP (MoM) (Sep)	-0.4%	-0.3%	0.5%
EUR	Spanish CPI (MoM) (Sep)	0.2%	0.2%	0.2%
EUR	Italian CPI (MoM) (Sep)	-0.4%	-0.3%	-0.4%
GBP	CPI (MoM) (Sep)	0.0%	0.2%	0.4%
GBP	CPI (YoY) (Sep)	1.2%	1.4%	1.5%
GBP	PPI Input (MoM) (Sep)	-0.6%	-0.4%	-1.2%
EUR	German ZEW Conditions (Oct)	3.2	18.0	25.4
EUR	German ZEW Sentiment (Oct)	-3.6	1.0	6.9
EUR	Industrial Production (MoM)	-1.8%	-1.6%	0.9%
EUR	ZEW Economic Sentiment	4.1	7.1	14.2

Upcoming Economic Events that you should be monitoring:

	Cur.	Event	Actual	Forecast	Previous
Wednesday, October 15
	CNY	CPI (YoY) (Sep)		1.7%	2.0%
	EUR	ECB President Draghi
	GBP	Claimant Count Change		-35.0K	-37.2K
	USD	Core Retail Sales (MoM)		0.3%	0.3%
	USD	PPI (MoM) (Sep)		0.1%	0.0%
	USD	Retail Sales (MoM)		-0.1%	0.6%
	EUR	ECB President Draghi