GBP/USD Weekly Fundamental Analysis, August 24 – August 28, 2015 Forecast

Weekly Analysis and Recommendations: 

The GBP/USD had a volatile week before finally closing higher. Earlier in the week, the Forex pair found support after the release of a better-than-expected consumer inflation report. This report showed a gain of 0.1% versus an estimate of 0.0%. Sellers came in, however, after the release of lower-than-expected retail sales later in the week. This report showed a weak gain of 0.1% versus an estimate of 0.4%. The market picked up strength on Thursday and Friday as risk averse investors sought protection in the British Pound.

Also supporting the Sterling was the mixed message sent by the latest July Fed minutes. The minutes offered little guidance as to the timing of the first Fed rate hike since 2006. This left the GBP/USD vulnerable to a short-covering rally as many traders reduced bets for an early rate hike in September. The turbulence created by China’s weak manufacturing activity report also helped underpin the British Pound as many traders felt that market conditions were too volatile for the Fed to hike rates at this time.

Based on the way we ended last week, buyers could continue to support the GBP/USD early next week if global equity markets continue to worsen. This event would take precedent over this week’s economic releases.

If the stock markets are relatively calm then traders could be influenced by reports featuring U.S. durable goods, consumer inflation, home sales and preliminary GDP. The key report out of the U.K. this week is second estimate GDP.

Fed speakers could influence the markets on Monday and Saturday. Bank of England Governor Carney is scheduled to speak on Friday.

Look for the slight uptrend to continue early in the week if the volatility resumes in the equity market to the downside. If conditions return to normal in the equity markets then the GBP/USD traders will respond more aggressively to the U.S. and U.K. economic reports.

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.

Important Reports to Watch This Week:

        Date                   Time          Curr                             Event                                                                            Forecast  Previous