GBP/USD Monthly Fundamental Forecast October 2014

Outlook and Recommendation

The GBP/USD just can’t get a break this month. After touching the 1.64 range the pound closed the month at 1.6213. Surviving the Scottish referendum the pound should grow as the UK economic situation remains positive. Jobs are doing well along with manufacturing while the housing market was a bit light this month. The broad-based move in favor of USD assets as well as a slightly less hawkish Bank of England (BoE) has also reversed the appreciating dynamics of the British pound (GBP), which materialized in the 12 months ending in June. Traders are of the view that the BoE will be the first major advanced economy to enter a monetary hiking cycle. Accordingly, GBP is expected to stabilize in October before slowly retracing some of its most recent losses.

Bank of England officials have split on interest rates for the past two months, with a minority voting to raise borrowing costs from a record-low 0.5 percent. The risks from Europe may reinforce the view among the majority that it’s not yet time to begin tightening policy.

The median estimate in a Bloomberg survey of economists was for the factory index to rise to 52.7 in September from an initially reported 52.5 in August. The PMI survey showed that output-price inflation at factories eased for a second month in September, with the index dropping to a 15-month low. Input prices fell for the first time in five months.

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.

Upcoming Economic Events that you should be monitoring:

Cur.                       Event    

Wednesday, October 1

                 CNY                    Manufacturing PMI                                                       

                 EUR                    German Manufacturing PMI                                                      

                 GBP                     Manufacturing PMI                                                       

                 USD                    ADP Nonfarm Employment Change                                                        

                 USD                    ISM Manufacturing PMI                                               

Thursday, October 2

                 GBP                     Construction PMI                                                          

                 EUR                    Interest Rate Decision                                                  

Friday, October 3

                 GBP                     Services PMI                                                    

                 USD                    Nonfarm Payrolls                                                          

                 USD                    Unemployment Rate                                   

                 USD                    ISM Non-Manufacturing PMI                                                     

Monday, October 6

                 CAD                    Ivey PMI                                                                          

Tuesday, October 7

                 GBP                     Manufacturing Production (MoM)                                          

Thursday, October 9

                 GBP                     Interest Rate Decision                                                

Friday, October 10

                 CAD                    Employment Change                                                  

Monday, October 13

                 CNY                    Trade Balance                                               

Tuesday, October 14

                 EUR                    German ZEW Economic Sentiment                                                                         

Wednesday, October 15

                 CNY                    CPI (YoY)                                                         

                 GBP                     Average Earnings Index +Bonus                               

Thursday, October 16

12:00       EUR                    CPI (YoY)                                                                          

Friday, October 17

15:30       CAD                    Core CPI (MoM)

Government Bond Auction

Date Time Country 

Oct 01 11:03 Sweden Bond auction

Oct 01 11:30 Germany Eur 5.0bn Aug 2024 Bund auction

Oct 01 11:30 UK Auctions 2% 2020 Gilt

Oct 02 10:30 Spain Bono/Obligacion auction

Oct 02 17:00 US Announces details of 3/10Y Note