GBP/USD Monthly Fundamental Forecast February 2014

Outlook and Recommendation

The GBP/USD had a stellar performance earlier in the month, reaching as high as 1.6668 but turned in the last week of the month to end at 1.6437 as the US dollar gained momentum. The GBP has had a strong start to the year, trading to a new multi-year high in mid-January. Technically, the upward trend is strong but sentiment is mixed. The CFTC reports that the GBP is the only major currency held long against the USD and the option market continues to price for upside GBP risk; but consensus forecasts are calling for a 1.2% drop in GBP before year-end. Many traders have revised higher their year-end GBP target, adjusting for an improvement in the economic outlook and a BoE who is now expected to hike rates in the first quarter of 2015.

Governor Mark Carney recently remarked that “Even though employment is growing and unemployment has fallen, [the recovery] still has some way to run before it would be appropriate to consider moving away from the emergency setting of monetary policy.” He also recently remarked that “The MPC will consider a range of options to update our guidance” which is thought to put the pressure either upon a possible but relatively rare accompanying statement to next week’s rate decision or to more fully explain updated guidance in the BoE’s Inflation Report due out on February 12^th.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Central Bank Name – The Bank of England

Date of next meeting: February 6, 2014

Current Rate: 0.50%

 

Economic events for the month of February affecting EUR, GBP and USD