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 declined to trade at 1.6064 in reaction to global sentiment. This week was all about risk aversion as the USD moved up against all its partners. The sterling was unable to mount the necessary strength to find the overall market moves but found enough resilience to keep above the 1.60 price.
As EU politics and elections shook investor’s confidence this week was all about safe haven and risk avoidance
End of the week found the BoE policy decision was the key factor for GBP trading. The BoE didn’t restart the printing press. This keeps sterling in the drivers’ seat against the euro, which is still suffering from political and economic uncertainty in the region. The sterling changed hands in the 1.6194 area at the start of trading in Europe. Sentiment on the European markets was a bit less negative compared to the tensions that spooked investors on Wednesday. The sell-off of European equities slowed and the euro entered calmer waters, too. On the UK side of the story, some investors adjusted sterling long positions ahead of the BoE policy decisions. The market reaction to the announcement was very moderate. UK bond yields rose a few basis points However, a clear break didn’t occur. So, a lot of sterling positive news was apparently already discounted.
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 up to the data analysis and information in our weekly reports, which cover the current week and are published by Sunday before the new week begins.
Major Economic Events for the past week actual v. forecast
|
May 10 |
AUD |
Employment Change |
15.5K |
-5.5K |
44.0K |
|
AUD |
Unemployment Rate |
4.9% |
5.3% |
5.2% |
|
|
GBP |
Interest Rate Decision |
0.50% |
0.50% |
0.50% |
|
|
Trade Balance |
0.4B |
1.0B |
0.3B |
||
|
USD |
Trade Balance |
-51.8B |
-50.0B |
-45.4B |
|
|
USD |
Initial Jobless Claims |
367K |
369K |
368K |
|
|
USD |
Fed Chairman Bernanke Speaks |
||||
|
May 11 |
CNY |
Chinese CPI (YoY) |
3.4% |
3.3% |
3.6% |
|
CNY |
Chinese CPI (MoM) |
-0.1% |
-0.2% |
0.2% |
Historical:
Highest: 1.681 USD on 17 Nov 2009.
Average: 1.5807 USD over this period
Upcoming Economic Events that affect the CHF, EUR, GBP and USD
|
May 14 |
07:00 |
EUR |
Finnish CPI (YoY) |
2.90% |
|
08:15 |
CHF |
PPI (MoM) |
0.3% |
|
|
08:30 |
EUR |
Dutch Retail Sales (YoY) |
0.90% |
|
|
10:00 |
EUR |
Industrial Production (MoM) |
-0.2% |
0.5% |
|
May 15 |
06:30 |
EUR |
French CPI (MoM) |
0.8% |
|
07:45 |
EUR |
French Non-Farm Payrolls (QoQ) |
-0.1% |
|
|
09:30 |
GBP |
Trade Balance |
-8.8B |
|
|
May 16 |
09:30 |
GBP |
Average Earnings Index +Bonus |
1.1% |
|
09:30 |
GBP |
Claimant Count Change |
3.6K |
|
|
10:00 |
EUR |
CPI (YoY) |
2.6% |
2.6% |
|
10:00 |
EUR |
Core CPI (YoY) |
1.6% |
|
|
11:00 |
EUR |
Portuguese Unemployment Rate |
14.00% |
Upcoming Government Bond Auctions
Date Time Country
May 14 08:30 Spain
May 14 09:10 Italy
May 14 09:10 Slovakia
May 14 09:10 Norway
May 14 09:30 Germany
May 14 10:00 Norway
May 15 09:30 Belgium
May 15 09:30 UK
May 16 08:50 France
May 16 09:10 Sweden
Originally posted here
