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 ended the week at a 7 month high trading at 1.6265
|
Date |
Open |
High |
Change % |
||
|
Apr 27, 2012 |
1.6265 |
1.6179 |
1.6280 |
1.6154 |
0.54% |
|
Apr 26, 2012 |
1.6178 |
1.6178 |
1.6207 |
1.6160 |
0.00% |
|
Apr 25, 2012 |
1.6178 |
1.6143 |
1.6183 |
1.6082 |
0.22% |
|
Apr 24, 2012 |
1.6143 |
1.6118 |
1.6164 |
1.6110 |
0.16% |
|
Apr 23, 2012 |
1.6118 |
1.6132 |
1.6135 |
1.6077 |
-0.09% |
The Pound surged above 1.62 against the U.S Dollar yesterday, breaking through significant resistance in the region of 1.6170, as a report showed that consumer confidence rose to the highest level since June. The UK currency also proceeded towards the highest level in 20 months versus the Euro, as the report will reduce speculation that the Bank of England will implement further quantitative easing in light of the technical recession in the UK.
The preliminary GDP figures on Wednesday will make grim reading for the government, but there are suggestions that -0.2% result will be revised higher over the coming weeks. The Pound rose against most of the majors yesterday and further gains against the Dollar may be likely if the market can remain above 1.6170.
The latest BBA mortgage approvals data recorded a decline to a 10 month low, which helped reinforce concerns surrounding the housing sector. The latest report from the Confederation of British Industry showed that a survey of retail sales weakened to -6 in April, from zero the previous month. However, companies were more optimistic about the May outlook, which provided a degree of relief.
Bank of England policy maker Martin Weale stated that the case for quantitative easing had been increased following the GDP data and negative media headlines about the contraction in growth had increased. There was still evidence of defensive inflows into the Pound, as the uncertainties surrounding the Euro-zone economic outlook persisted. On a trade-weighted basis, the UK currency hit a fresh 30-month high versus the Euro, as the market advances close to 1.23.
The Pound also advanced towards 1.56 against the Australian Dollar and traded close to the $2.00 mark versus the New Zealand Dollar. The decline in risk appetite following the surprise contraction in UK economic growth, combined with the structural vulnerabilities in the Euro-zone had reduced traders’ appetite for higher-yielding currencies.
The ratings agency Standard & Poor’s downgraded Spain’s credit rating and highlighted concern that Europe’s debt crisis is worsening.
Major Economic Events for the past week actual v. forecast
|
Core Retail Sales (MoM) |
0.5% |
1.0% |
-0.8% |
|
|
USD |
New Home Sales |
328K |
320K |
353K |
|
GBP |
GDP (QoQ) |
-0.2% |
0.1% |
-0.3% |
|
GBP |
GDP (YoY) |
0.0% |
0.3% |
0.5% |
|
USD |
Core Durable Goods Orders (MoM) |
-1.1% |
0.5% |
1.9% |
|
USD |
Interest Rate Decision |
0.25% |
0.25% |
0.25% |
|
NZD |
Interest Rate Decision |
2.50% |
2.50% |
2.50% |
|
USD |
Initial Jobless Claims |
388K |
375K |
389K |
|
USD |
GDP (QoQ) |
2.2% |
2.5% |
3.0% |
Historical:
Highest: 1.681 USD on 17 Nov 2009.
Average: 1.5807 USD over this period
Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD
|
Tue May 1 |
4:30am |
GBP |
Manufacturing PMI |
51.4 |
52.1 |
|
10:00am |
USD |
ISM Manufacturing PMI |
53.0 |
53.4 |
|
|
Wed May 2 |
4:30am |
GBP |
Construction PMI |
54.2 |
56.7 |
|
8:15am |
USD |
ADP Non-Farm Employment Change |
179K |
209K |
|
|
Thu May 3 |
4:30am |
GBP |
Services PMI |
54.6 |
55.3 |
|
7:45am |
EUR |
Minimum Bid Rate |
1.00% |
1.00% |
|
|
8:30am |
EUR |
ECB Press Conference |
|||
|
8:30am |
USD |
Unemployment Claims |
382K |
388K |
|
|
10:00am |
USD |
ISM Non-Manufacturing PMI |
55.5 |
56.0 |
|
|
Fri May 4 |
8:30am |
USD |
Non-Farm Employment Change |
176K |
120K |
|
8:30am |
USD |
Unemployment Rate |
8.2% |
8.2% |
Upcoming Government Bond Auctions
Date Time Country
May 01 09:30 UK
May 02 09:10 Sweden
May 02 09:30 Portugal
May 02 13:00 US
May 03 08:30 Spain
May 03 08:50 France
May 03 09:10 Sweden
May 03 09:30 UK
May 08 09:15 Austria
May 08 09:30 Belgium
May 08 14:30 UK
May 08 15:30 Italy
May 08 17:00 US
May 09 09:10 Sweden
May 09 09:30 Germany
May 09 09:30 Swiss
May 09 09:30 UK
May 09 14:30 Sweden
May 09 15:30 Italy
May 09 17:00 US
May 10 15:00 US
May 10 17:00 US
May 11 09:10 Italy BOT auction
May 11 10:00 Belgium
Originally posted here
