GBP/USD Fundamental Analysis October 6, 2014 Forecast

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Updated: Aug 24, 2015, 22:00 UTC

Analysis and Recommendations: The GBP/USD took a big hit dropping 78 points to reach 1.6067 after UK services PMI missed expectations. The preliminary

GBP/USD Fundamental Analysis October 6, 2014 Forecast

Analysis and Recommendations:

The GBP/USD took a big hit dropping 78 points to reach 1.6067 after UK services PMI missed expectations. The preliminary reading dropped from 53.1 to 52.8. Services did somewhat better than manufacturing of late, but a negative surprise is possible. In theory this would put additional pressure on the ECB to ease its policy further. However, with the payrolls on the agenda, the focus for today’s currency trading will probably be on the USD side of the story. The US payrolls always have the potential to decide on the next directional move of the dollar. The consensus stands at 215 000 net job growth in the US last month. As was the case of late, markets will also keep a close look at the average hourly earnings.

The UK services PMI is very interesting and might be important for markets. Services were the engine of the strong growth performance in the UK of late. The consensus expects a moderate decline from 60.5 to 59.00 but printed below expectations. The strong reading of the services PMI is a major contrast with the loss of momentum in the manufacturing sector. The U.K. is faring a tad better despite activity in the manufacturing sector slowing again last month. The PMI for the sector has fallen to a new 17-month low (51.6 versus 52.2), stronger proof that the upsurge in U.K. manufacturing witnessed in the first half of the year seems to have run its course. This could very much begin the change of thought for the Bank of England (BoE). Governor Mark Carney will have to consider whether the U.K. economy is strong enough to withstand a rise in interest rates.

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
AUD	HIA New Home Sales	3.3%		-5.7%
CNY	Non-Manufacturing PMI	54.0		54.4
EUR	Spanish Services PMI	55.8	57.1	58.1
EUR	Italian Services PMI	48.8	49.6	49.8
EUR	French Services PMI	48.4	49.4	49.4
EUR	German Services PMI	55.7	55.4	55.4
EUR	Services PMI (Sep)	52.4	52.8	52.8
GBP	Services PMI (Sep)	58.7	59.1	60.5
EUR	Retail Sales (MoM)	1.2%	0.1%	-0.4%
USD	Nonfarm Payrolls (Sep)		215K	142K
USD	Private Nonfarm		210K	134K
USD	Trade Balance (Aug)		-40.90B	-40.60B
USD	Unemployment Rate		6.1%	6.1%