GBP/USD Fundamental Analysis July 13, 2012, Forecast

Analysis and Recommendations:

The GBP/USD is trading at 1.5444 on the back of the USD. The USD continues to soar today, trading at over 83.99 on the DX. There was no eco data in the UK and limited data in Europe. Only two odd reports

European industrial production showed a glimmer of promise in this morning’s May print, rising 0.6% m/m. Half of the outperformance compared to flat consensus expectations was attributed to downward revisions to the prior month that is now reported to have dropped by 1.1% m/m. The volatile trend remains pointed lower since last September.

The Irish economy missed expectations for Q1 GDP, but only because of upward revisions to the prior quarter. Upward revisions to Q4 growth (from -0.2% q/q to +0.7% q/q) explained all of the disappointment to the Q1 print released this morning and then some (-1.1% vs -0.4% expectation). That’s perhaps small comfort in that the economy definitely weakened into the New Year in line with other European economies. The softness was also broadly based as consumption fell 2.1% q/q, sectors like transport plunged 11.5%, with brighter spots in government spending (+2.2% after a string of negatives) and capital spending.

With the confusing FOMC minutes behind and markets no longer trying to predict what the Fed will do, atleast for a day or two, focus will return tomorrow to fundamentals, but there is little in the way of data, so it will be a news flow day, or maybe just a quiet day.

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Economic Data July 13, 2012 actual v. forecast

Date	Currency	Event	Actual	Forecast	Previous
Jul. 12	AUD	RBA Assist Gov Lowe Speaks
KRW	South Korean Interest Rate Decision	3.00%	3.25%	3.25%
AUD	Employment Change	-27.0K	0.3K	27.9K
AUD	Unemployment Rate	5.2%	5.2%	5.1%
JPY	Interest Rate Decision	0.10%	0.10%	0.10%
EUR	French CPI (MoM)	0.0%	-0.1%	-0.1%
JPY	BoJ Press Conference
EUR	Industrial Production (MoM)	0.6%	-0.1%	-1.1%
USD	Import Price Index (MoM)	-2.7%	-1.7%	-1.0%
USD	Initial Jobless Claims	350K	372K	374K
USD	Continuing Jobless Claims	3304	3300K	3306K