By FXEmpire.com
Introduction: While the ranges are wider (and so should stops be), the lines are rather distinctive, especially towards the borders of the long term wide range. This pair makes for good trades, with the new austerity program implemented in the UK, the GBP is moving more on Fundamentals now.
- The interest rate differential between the Bank of England(BoE) and the Federal Reserve
- High yield and attractive growth in the UK drives GBP/USD higher
Weekly Analysis and Recommendation:
The GBP/USD closed out a winner along with the Olympics’. Negative eco data showing the UK deep in double dip recession territory along with falling PMI and retail sales was not enough to hold down this pair. The pair closed the week at 1.5643.
|
Date |
Open |
High |
Change % |
||
|
Aug 03, 2012 |
1.5643 |
1.5514 |
1.5657 |
1.5506 |
0.83% |
|
Aug 02, 2012 |
1.5514 |
1.5543 |
1.5678 |
1.5491 |
-0.18% |
|
Aug 01, 2012 |
1.5542 |
1.5666 |
1.5691 |
1.5532 |
-0.80% |
|
Jul 31, 2012 |
1.5668 |
1.5712 |
1.5731 |
1.5626 |
-0.28% |
|
Jul 30, 2012 |
1.5712 |
1.5727 |
1.5732 |
1.5674 |
-0.10% |
As traders positioned themselves ahead of the FOMC meeting and the BoE announcement, the USD weakened allowing the GBP to open the week strong, but after the Feds and the BoE with held stimulus, the pair settled to trade at 1.5514 but rose on the weakness of the USD on Friday.
Speculation has been building that the MPC may cut Bank Rate at some point in order to maximize the impact of the QE that has already been delivered. The rationale is that there are billions of pounds parked at the Bank of England in reserves. Some argue that if the remuneration on these reserves is cut, then it will motivate the holders of these reserves to extend new loans or put the cash to work by purchasing riskier / higher yielding assets.
We will have to wait and see what is to come for the UK.
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 weeklyreports and we provide daily updates and outlooks.
Major Economic Events for the week of Aug 30 – Jul 3 actual v. forecast for Euro, GPB, the Franc, and USD
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jul 30 |
EUR |
Spanish Flash GDP q/q |
-0.4% |
-0.4% |
-0.3% |
|
EUR |
Italian 10-y Bond Auction |
5.96|1.3 |
5.82|1.7 |
||
|
Jul 31 |
USD |
CB Consumer Confidence |
65.9 |
61.5 |
62.7 |
|
Aug 1 |
CNY |
Manufacturing PMI |
50.1 |
50.4 |
50.2 |
|
GBP |
Manufacturing PMI |
45.4 |
48.6 |
48.4 |
|
|
USD |
ADP Non-Farm Employment Change |
163K |
121K |
172K |
|
|
USD |
ISM Manufacturing PMI |
49.8 |
50.3 |
49.7 |
|
|
USD |
FOMC Statement |
||||
|
Aug 2 |
GBP |
Construction PMI |
50.9 |
48.2 |
48.2 |
|
EUR |
Spanish 10-y Bond Auction |
6.65|2.4 |
6.43|3.2 |
||
|
GBP |
Asset Purchase Facility |
375B |
375B |
375B |
|
|
GBP |
Official Bank Rate |
0.50% |
0.50% |
0.50% |
|
|
EUR |
Minimum Bid Rate |
0.75% |
0.75% |
0.75% |
|
|
EUR |
ECB Press Conference |
||||
|
USD |
Unemployment Claims |
365K |
375K |
357K |
|
|
Aug 3 |
GBP |
Services PMI |
51.0 |
51.6 |
51.3 |
|
USD |
Non-Farm Employment Change |
163K |
101K |
64K |
|
|
USD |
Unemployment Rate |
8.3% |
8.2% |
8.2% |
|
|
USD |
ISM Non-Manufacturing PMI |
52.6 |
52.1 |
52.1 |
Historical: From 2010 to Present
Highest: 1.6747 USD on April 28, 2011.
Average: 1.5751 USD over this period
Lowest: 1.4229 USD on May 20, 2010.
Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD
|
Date |
Time |
Currency |
Event |
Previous |
|
Aug 6 |
8:30 |
EUR |
Sentix Investor Confidence |
-29.6 |
|
23:01 |
GBP |
BRC Retail Sales Monitor y/y |
1.4% |
|
|
Aug 7 |
7:00 |
CHF |
Foreign Currency Reserves |
364.9B |
|
7:15 |
CHF |
CPI m/m |
-0.3% |
|
|
8:00 |
EUR |
Italian Industrial Production m/m |
0.8% |
|
|
8:30 |
GBP |
Manufacturing Production m/m |
1.2% |
|
|
10:00 |
EUR |
German Factory Orders m/m |
0.6% |
|
|
14:00 |
GBP |
NIESR GDP Estimate |
-0.2% |
|
|
Aug 8 |
5:45 |
CHF |
SECO Consumer Climate |
-8 |
|
9:30 |
GBP |
BOE Inflation Report |
||
|
10:00 |
EUR |
German Industrial Production m/m |
1.6% |
|
|
12:30 |
USD |
Prelim Nonfarm Productivity q/q |
-0.9% |
|
|
12:30 |
USD |
Prelim Unit Labor Costs q/q |
1.3% |
|
|
14:30 |
USD |
Crude Oil Inventories |
||
|
Aug 9 |
8:00 |
EUR |
ECB Monthly Bulletin |
|
|
8:30 |
GBP |
Trade Balance |
-8.4B |
|
|
12:30 |
USD |
Trade Balance |
-48.7B |
|
|
12:30 |
USD |
Unemployment Claims |
||
|
Aug 10 |
6:45 |
EUR |
French Industrial Production m/m |
-1.9% |
|
8:30 |
GBP |
PPI Input m/m |
-2.2% |
|
|
12:30 |
USD |
Import Prices m/m |
-2.7% |
|
|
18:00 |
USD |
Federal Budget Balance |
-59.7B |
Upcoming Government Bond Auctions
Date Time Country
Aug 06 09:10 Norway
Aug 07 00:30 Japan
Aug 07 09:15 Austria
Aug 07 14:30 UK
Aug 07 17:00 US
Aug 08 09:30 Germany
Aug 08 10:00 Norway
Aug 08 15:30 Italy
Aug 08 17:00 US
Aug 09 15:30 Italy
Aug 09 17:00 US
Aug 10 10:00 Belgium
Aug 13 09:10 Italy
Aug 13 09:10 Norway
Aug 13 09:30 Germany
Aug 14 09:10 Greece
Aug 14 09:10 Italy
Aug 14 09:30 Belgium
Aug 14 14:30 UK
Aug 15 09:10 Sweden
Aug 16 09:30 UK
Aug 16 15:00 US
Click here for updated GBP/USD News.
Originally posted here
