GBP/USD Monthly Fundamental Forecast June 2013

Outlook and Recommendation

The GBP/USD closed the month at 1.5196 after falling off its high of the month of 1.5602 after the UK surprised markets beating GDP expectations. The pound sterling showed renewed weakness in May, with losses amounting to roughly 3% versus the US dollar reflecting weak economic data and the general bias toward USD strength over the month. Despite the rebound in output in the first quarter (the preliminary GDP estimate confirmed growth of 0.3% q/q in January-March, following the prior quarter’s 0.3% contraction), there are few indications that the economy is entering a meaningful recovery. The gain was driven almost entirely by a large build-up in inventories, with a small addition from household spending. Meanwhile, private investment and exports continued to detract from growth. Disappointing retail sales data for April suggest that consumer spending is losing steam. The fact that the government’s promised ‘rebalancing’ toward investment and trade has yet to materialize has prompted calls for a tempering of fiscal consolidation plans

The British pound (GBP) is also at risk of further downside, weighed down by low growth, elevated inflation, an upcoming change in leadership at the Bank of England and negative sentiment.

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 or last meeting: June 6, 2013

Current Rate: 0.50%

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