By ForexMansion.com

 

The GBP/USD advanced last week to record the second weekly advance and a rebound in April after dropping in March after the improvement progress in UK growth data which showed that the British economy expanded 0.5% in the first quarter compared with the 0.5% contraction recorded in fourth quarter of 2010.

In addition, the dollar continued its weakness after the dovish announcement by the Fed’s chairman, Ben Bernanke, as he stated that he will continue the lose monetary policy to buttress growth which increased speculations that the Fed will not tighten monetary policy any soon, thereby pushing the dollar to 17-month low versus the cable. 

Thus, the outlook for the pair, meanwhile, is to the upside as the BoE is expected to raise interest rate in the current quarter, especially after the improvement in growth data at the time where inflation remains double the bank’s 2% target. 

The main focus this week will be on the BoE’s rate decision for the month of May, where expectations refer to no change in monetary policy as the bank will keep both interest rate and APF steady at 0.50% and 200 billion pounds. On the other hand, the US will release the infamous jobs report in the United States where estimations are in favor of improvement which may help the dollar to rebound.

The release of the data this week will be as follows:

Monday May 2:

The main focus will be on manufacturing data as at 14:00 GMT the US will release ISM manufacturing for April, as forecasts refer to a drop in the index to 59.6 from the prior 61.2, while the UK lacks fundamentals. 

Tuesday May 3:

UKwill release PMI manufacturing for April with expectations showing a decline to 57.0 from 57.1. At 14:00 GMT, factory orders report for the month of April is due where analysts expect the reading to soar1.7% from the previous 0.1% drop, yet it is expected to have slight effect on the pair’s movements.

Wednesday May 4:

Investors will wait for PMI construction, mortgage approvals, and M4 money supply as of 08:30 GMT. On the other hand, at 12:15 GMT then 14:00 GMT, the U.S economy is to release ADP employment change where it is expected to decrease to 200,000 in April from the previous 201,000, while ISM non-manufacturing will rise to 58.0 in April from 57.3, according median forecasts. 

Thursday May 5:

The main spot light will be on the rate decision for the BoE, due at 11:00 GMT, which is predicted to witness no change. Yet, before it PMI services will be due at 08:30 with expectations to show a decline to 56.0 in April from 57.1.

At 12:30 GMT, the U.S economy will release initial jobless claims for the week ending April 30 and continuing claims for the week ending April 23. 

Friday May 6:

The week ends with the release of some inflation data from the United Kingdom as detailed PPI data are due at 08:30 GMT. However, more concentration will be on US data as it will release awaited non-farm payrolls report. Analysts expect that the change in non farm payrolls will reach 180,000 from the previous 216,000 while unemployment will linger at 8.8%.

Originally posted here

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