GBP/USD Fundamental Analysis – week of September 5, 2016

The GBP/USD outperformed last week with continued positive economic data with PMI’s all printing better than expected. The pound climbed to 1.3295 with a gain of 1.19%. Even the OECD admitted that the Brexit vote was not as devastating to the UK economy as expected. Prime Minister Theresa May is moving forward with negotiations with the EU and is likely to be able to wrap things up with much upset to the economy. The pound technicals are reading a strong sell as the pound has over extended itself and will most likely adjust in the new week.

Indications that the UK’s economic prospects outside the EU may not be as bleak as some analysts’ forecast are providing some support to the pound, which is still the worst-performing major currency since June 23rd, the day Britain voted to exit the world’s biggest trading bloc.

The currency extended its gains versus the dollar on Friday as a report showed US payrolls grew less in August than economists predicted. With terms of the exit still to be negotiated, the risk for pound bulls is that the current optimism turns out to be short-lived. Sterling is still down 10 per cent versus the dollar since the day of the EU referendum.

The pound extended gains after data showed U.S. jobs growth in August falling short of expectations, reducing the likelihood that the Federal Reserve will raise rates later this month. The dollar index was down 0.2 percent in London afternoon trade.

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This Week’s Economic Events That You Should Be Monitoring:

 Government Bond Auctions

Date Time       Country           Auction

Sep 06 11:00 Austria Holds bond auction

Sep 06 11:30 UK 1.5% 2026 Gilt

Sep 06 11:30 Germany Holds I/L bond auction

Sep 07 10:30 Denmark Holds bond auction

Sep 07 11:03 Sweden Holds bond auction

Sep 07 11:30 Germany Eur 5bn 0% Aug 2026 Bund

Sep 08 11:00 Ireland Holds bond auction

Sep 08 17:20 Italy Announces details of bond auction