GBP/USD Fundamental Analysis October 17, 2014 Forecast

Analysis and Recommendations:

The GBP/USD eased by 19 points to trade at 1.600 as the US dollar climbed today. The pound remained a bit on the positive side after yesterday’s dip in unemployment. The rate of consumer-price growth dropped to 1.2pc from 1.5pc in August, the Office for National Statistics said yesterday. That’s the lowest since September 2009. Sterling fell to a one-month low against the euro and headed towards its lowest against the dollar since last November, pushing back expectations of a rise in UK interest rates well into 2015.

A drop in the value of the pound is bad news for exporters here. A stronger pound would be good news in the run-up to Christmas, particularly in the food and drink sector where the UK remains the dominant market for Irish products.

The fall in UK unemployment, fall in UK inflation and generally robust data elsewhere in the British economy have taken their toll on the Pound. The fact that all this data removes the Bank of England’s interest rate hike imperative makes the Pound a less attractive place for investors to store wealth. In spite of that, BOE member Martin Weale repeated his calls for an early interest rate hike but no one knows why. It would be completely at odds with the Bank’s remit of stable inflation and growth. And to add to this melee, the FTSE 100 Index delivered its sharpest drop in 16 months yesterday (more than 2.5% decline) after poor US economic data. Sterling has slowed its decline but the drop was quite dramatic.

US retail sales fell, business sentiment was down and the Federal Reserve’s Beige Book was published but that has become synonymous with the words ‘modest’ and ‘moderate’. That is how the Fed sees the US recovery.

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:

Government Bond Auction

Date Time Country Auction

Oct 20 12:00 Belgium OLO Auction

Oct 20 12:00 Slovakia Bond auction (for decision)

Oct 21 10:30 Spain 3 & 9M T-bill auction

Oct 21 11:00 Norway Bond auction

Oct 21 11:00 UK Auctions 2.75% 2024 Gilt

Oct 22 11:30 Germany Eur 2.0bn Aug 2046 Bund auction

Oct 23 11:03 Sweden I/L bond auction

Oct 23 17:00 US Announces 2/5/7Y Note & 2Y FRN auctions on Oct 28/29/30 & 29

Oct 23 17:30 Italy Announces details of BTPei/CTZ auctions on Oct 28

Oct 23 19:00 US 30Y TIPS auction

Oct 24 17:30 Italy Announces details of BOT auction on Oct 29