GBP/USD Fundamental Forecast – September 5, 2016

The GBP/USD edged down a few points to trade at 1.3265 remaining near its highest level since the Brexit vote. The US dollar remains positive ahead of the jobs report due in a few hours. The sector recorded the highest ever month-on-month rise in August to sit at 53.3 in August, up from 48.3 in July, as measured by the Markit manufacturing PMI.

The weaker pound following the vote to leave the European Union (EU) boosted new export business last month and helping to increase manufacturing output to its highest level since November 2015.

It is the latest set of data to show a Brexit-related economic apocalypse is not taking place, as remain doom-mongers such as David Cameron and George Osborne had claimed in the run-up to the referendum.

The Pound remained trending flat on Friday despite the UK’s Construction PMI printing above expected levels. Although the measure was still in contraction territory, it improved from 45.9 to 49.2, a considerably better result than the 46.5 reading anticipated.

Markit economist Tim Moore noted; ‘The downturn in UK construction activity has eased considerably since July, primarily helped by a much slower decline in commercial building. Construction firms cited a nascent recovery in client confidence since the EU referendum result and a relatively steady flow of invitations to tender in August.’

Meanwhile, David Noble of the Chartered Institute of Procurement & Supply commented; ‘Employment levels recovered to a modest degree, though at the second-slowest pace for three years. Some firms reported that they planned to increase staff numbers in hopeful anticipation of a surge in activity towards the end of the year. Business sentiment was moderately more positive than that seen in the immediate aftermath of the Brexit vote.’

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 September 5, 2016

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