GBP/USD Fundamental Forecast – September 14, 2016

The GBP/USD tumbled 137 points to trade at 1.3200 as the US dollar and there were warning about the Brexit effects on growth and the economy over the near term. Lackluster inflation data weighed heavily on the currency along with moves by Prime Minister May to begin negotiations with the Eurozone.

Theresa May, the British prime minister, has won maneuvering room by assembling a government more quickly than expected after the dashing of predecessor David Cameron’s aim of staying in the EU.

Short-term advantage may grow if the British economy remains on an even keel and the rest of Europe becomes increasingly mired in domestic politics. But benefits will seep away if May fails to retain control of a restive Conservative Party. Many factions are suspicious of May’s apparent deviations from the Leavers’ aim for a speedy, reasonably clear-cut withdrawal.

Dissonance within May’s cabinet trio of red-blooded Brexiteers — Boris Johnson, David Davis and Liam Fox, the ministers responsible for foreign affairs, exiting the EU and foreign trade — augurs’ possible future instability. Of the threesome, Johnson has recently been the most sure-footed, but at the weekend he signaled an effort to re-energize May by broadcasting support for a new cross-party exit campaign.

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Upcoming Economic Events that you should be monitoring:

 September 14, 2016

Government Bond Auctions

Date Time Country Auction

Sep 13 11:00 Netherlands Eur 2-3bn 0% Jan 2022 DSL

Sep 13 11:10 Italy Holds bond auction

Sep 14 11:05 Norway Holds bond auction

Sep 14 11:30 UK 0.125% 2046 I/L Gilt

Sep 14 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

Sep 15 10:30 Spain Holds bond auction

Sep 15 11:03 Sweden Holds I/L bond auction

Sep 15 11:50 France Holds bond auction