GBP/USD Weekly Fundamental Analysis – March 7 -11, 2016 – Forecast

Weekly Analysis and Recommendation:

 The GBP/USD ended the week up 2.58% on weakness in the US dollar. The pound ended at 1.4228. The broader outlook for GBP/USD remains tilted to the downside as the BoE lags behind its U.S. counterpart, and the pair may continue to carve a long-term series of lower highs & lows as the threat of an EU exit dampens the fundamental outlook for the U.K.

UK PMI data headlines the European data docket. The catch-all Composite index is expected to show the pace of manufacturing- and service-sector activity growth slowed in February after hitting a six-month high in January.

Soft factory-sector and construction PMIs earlier in the week failed to stymie a British Pound recovery. The currency posted the latest daily gain versus the US Dollar in a month in yesterday’s trade after demand rose and yields declined at an auction of five-year bonds, pointing to investors’ confidence despite the looming “Brexit” referendum.

This coupled with an already steep slide in the priced-in BOE rate hike outlook and build-up in speculative net-short exposure is likely to make the UK unit relatively resilient in the face of negative news flow. Alternatively, an upside surprise may fuel unwinding of short GBP positioning, extending the currency’s recovery.

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.

Major Economic Events for the week:

Upcoming Government Bond Auctions

Date Time Country 

Mar 07 13:00 Norway Details of bond auction on Mar 09

Mar 08 11:00 Austria Holds bond auction

Mar 08 11:30 UK 3.75% 2052 Gilt auction

Mar 08 11:30 Germany Holds I/L bond auction

Mar 08 17:20 Italy Details of bond auction

Mar 08 19:00 US Holds 3-year note auction

Mar 09 13:00 Norway Holds bond auction

Mar 09 11:30 Germany Eur 4bn Mar 2018 Schatz

Mar 09 17:20 Sweden Details of bond auction on Mar 16

Mar 09 19:00 US Holds 10-year note auction

Mar 10 11:03 Sweden Holds I/L bond auction

Mar 10 11:30 UK New Nov 2036 Gilt linker auction

Mar 10 19:00 US Holds 30-year bond auction

Mar 11 11:10 Italy Holds bond auction