GBP/USD Weekly Fundamental Analysis February 27 – March 2, 2012, Forecast

By FX Empire.com

Economic Events

It is a very busy week with economic events combining the end and the beginning of a month.

Please see the daily fundamental forecasts for details on each of these events.

Below are the only major events of the week.

The G20 Summit is taking place in Mexico this week.

Feb. 27	07:00	EUR	GfK German Consumer Climate
10:30	CHF	KOF Leading Indicators
11:00	GBP	CBI Distributive Trades Survey
15:00	USD	Pending Home Sales (MoM)
Feb. 28	08:15	CHF	Employment Level
Tentative	EUR	German CPI (MoM)
13:30	USD	Core Durable Goods Orders (MoM)
13:30	USD	Durable Goods Orders (MoM)
15:00	USD	CB Consumer Confidence
19:00	USD	Beige Book
Feb. 29	07:45	EUR	French Consumer Spending (MoM)
08:55	EUR	German Unemployment Rate
08:55	EUR	German Unemployment Change
10:00	EUR	CPI (YoY)
10:00	EUR	Core CPI (YoY)
10:30	EUR	German 10-Year Bund Auction
13:30	USD	GDP Price Index (QoQ)
13:30	USD	GDP (QoQ)
14:45	USD	Chicago PMI
15:00	USD	Fed Chairman Bernanke Testifies
Mar. 01	06:30	CHF	GDP (QoQ)
08:30	CHF	SVME PMI
09:00	EUR	Manufacturing PMI
09:30	GBP	Manufacturing PMI
10:00	EUR	CPI (YoY)
10:00	EUR	Unemployment Rate
13:30	USD	Core PCE Price Index (MoM)
13:30	CAD	Current Account
13:30	USD	Personal Spending (MoM)
13:30	USD	Initial Jobless Claims
13:30	USD	Continuing Jobless Claims
15:00	USD	ISM Manufacturing Index
15:00	USD	Fed Chairman Bernanke Testifies
Mar. 02	13:30	CAD	GDP (MoM)
15:00	CAD	Ivey PMI

Monday, kicks off the week in Australia where the Labor Party will have the option to select a new leader after Prime Minister Julia Gillard announced a spill of the party due to ongoing tension between her and recently-departed Foreign Minister Kevin Rudd.

In the UK, January mortgage approvals data will be released, as well as the CBI distributive trades survey for February.

European Monetary Union money supply data for January will also be announced.

European Council president Jose Barroso speaks on the future of the European Union.

European Union competition commissioner Joaqu?n Almunia will appear before the European Parliament’s internal market and consumer protection committee. He will appear again on Tuesday.

US pending home sales index for January will be released, alongside the Dallas Federal Reserve manufacturing survey

Tuesday sees the release of February consumer confidence data in the US, alongside figures on durable goods orders for January.

Analysts expect orders to have fallen 0.5 per cent in the month, while consumer confidence may have risen two points to 63.1.

The S&P Case Shiller home price index will also be released, and is expected to show a 0.2 per cent fall in prices during the month of December.

The Greek parliament will hold its vote on the second bailout granted to the country by the EU.

European Council President Barroso will address an EU conference.

Bank of England deputy governor Paul Tucker is due to talk at the British society of business economists annual dinner.

Wednesday the markets will be focused on the much anticipated US gross domestic product data for the December quarter released in the US. Analysts are expecting the figures to confirm annualized growth figures of 2.8 per cent.

The US government’s Beige Book will also be released, its report on the country’s current economic situation.

In Australia the ABS will release retail trade data for January, as well as December quarter construction work figures.

Economists are tipping retail sales to have risen 0.5 per cent in the month, while a 1 per cent fall in construction activity is predicted.

January private sector credit data will also be released. Analysts expect the data to show a 0.3 per cent rise.

Rounding off a big day, the Australian Industry Group will release manufacturing index data.

The Chicago purchasing managers index figures and the weekly Energy Information Association petroleum status report will be released.

In the UK, GfK is due to release consumer confidence data for February.

January consumer credit for January is on tap, along with December quarter M4 money supply data.

Cleveland Federal Reserve president Sandra Pianalto will speak on the prospects for the US economy in the US.

EU internal market and services commissioner Michel Barnier will address a conference in Europe on the credibility of European governance.

In the US, Federal Reserve chairman Ben Bernanke will deliver his semi-annual monetary policy report.

Dallas Federal Reserve president Richard Fisher will give a speech on the US economy.

Philadelphia Federal Reserve president Charles Plosser will also speak.

Rounding off a busy Wednesday, the EU is due to release advice on potential competition and capital rules for trade settlement in the region.

Thursday in the US.car sales data and construction spending figures will be released along with jobless claims data and the ISM manufacturing index for February is on tap. The index is tipped to show a reading of around 55, indicating ongoing expansion.

Personal income and outlays figures will also be released. Economists are tipping the figures to show a 0.5 per cent rise in incomes and a 0.4 per cent lift in spending.

EU leaders will kick off a two day economic summit in Europe. Before the event, EU conservative leaders will hold a pre-summit meeting.

European commissioner for economic and monetary affairs Olli Rehn will deliver an address to the CEPS.

Atlanta Federal Reserve president Dennis Lockhart will speak on the US economy and banking.

Friday brings Greece back into focus with the Greek gross domestic product data which will be heavily monitored in the wake of the approval of its second EU bailout.

US Federal Reserve president James Bullard will deliver an address on the US economy in the aftermath of the financial crisis.

Historical:

Highest: 1.681 USD on 17 Nov 2009.

Average: 1.5807 USD over this period.

Rule:

GBP/USD: 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.

Characteristics

Average broker spread: 4-5 pips
Daily range average: 150-200 pips
Best time to trade: Euro Session (0700 GMT – 1700 GMT)
Some factors affecting the GBP/USD rate:

• 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

Applying Technical Analysis and/or Analyzing Fundamental News from the UK and US zone to make GBP/USD trading decisions. Watch out for false break outs. Surprising economic news releases can make the GBP/USD move a lot in one direction without much retracement.

Analysis and Recommendation:

The GBP/USD dropped mid week on negative news and comments in the UK but rebounded as the USD lost strength towards the end of the week, the greenback fell against all of its trading partners. The Sterling moved from 1.5662 to close the week at 1.5872 after bouncing off 1.59.

Highlights of major economic events for the week of February 20-24, 2012

The sale of new single-family homes in the U.S. fell slightly in January, but only because sales in December were revised higher. Taken together, sales in those two months were the strongest in a year, a good sign for a market that’s been in a deep slump since the 2007-2009 recessions.

Consumer sentiment rose in February to the highest level in a year on strong awareness of improving employment, according to a gauge released Friday by the University of Michigan

Consumer sentiment rose to 75.3 in February from 75 in January, achieving a sixth month of improvement. Consumers’ expectations rose to 70.3 from 69.1, while their views on current conditions declined to 83 from 84.2.

In the UK today Q4 2nd Estimate GDP -0.2% q/q; +0.7% y/y LONDON (MNI) – Household spending rose for the first time in over a year in the fourth quarter and net exports boosted growth, but these were offset by a large fall in investment spending, figures from National Statistics showed Friday

In France today February consumer confidence up 82; January 81 (unrevised) -Matches expectations; MNI analysts survey median forecast 82 -Buying-propensity up 5 points -Future inflation worries down 2 points -Jobless fears down 1 point

The European Commission sharply reduced its forecasts for growth in the EU and the Eurozone for 2012 while also raising its forecasts for inflation, suggesting that the European economy could struggle with stagflation in 2012 The Commission said the economy in the 27-member EU will not grow at all this year.

In the UK Jan Mortgage Approvals Highest Since Dec 2009 says British Bankers Assn. January mortgage approvals rose to their highest level since December 2009

Germany preliminary December machine output -1.9% y/,y. Also Germany’s Business morale up more than expected.

Italian consumer confidence rose to 94.2 from 91.8 in Jan when it had posted a 16-year low. The improvement was the result of better sentiment in the general economic climate.

Fitch downgraded Greece’s credit rating.

Eurozone Nov Industrial orders revised to -1.1% from -1.3%, y/y revised to -2.5% from -2.7% A much stronger set of numbers including the revisions.

Eurozone Feb Flash composite PMI 49.7 from 50.4 – expected 50.6

German February flash manufacturing PMI 50.1

French February flash manufacturing PMI 50.2

Bank of England Governor Mervyn King said the BOE was expecting a “zigzag” pattern of the quarterly growth this year and the detailed forecasts underpinning the quarterly Inflation Report, published Wednesday, bear this out.

In the UK Public Borrowing reported the highest surplus since January 2008, and along with revisions to previous data, suggest borrowing is on track to undershoot the latest forecasts

Greek bailout will “likely” get final approval in the week starting March 12, according to statement on Finnish Finance Ministry website. “The final approval for activating the EFSF guarantees and completing the PSI operation are conditional on the Troika and the eurogroup deeming the PSI as successful and Greece to have fulfilled its commitments”

China’s VP Xi Jinping, in a speech in Dublin last night, said his country is considering more support for Europe. The official said “We are considering more involvement in helping address the European debt issue through EFSF, ESM and other channels” adding “China supports the European integration process, the euro, by purchasing European bonds.”

UK Gross mortgage lending fell 14.1% on the month in January but was up 10.2% on a year ago, according to Council of Mortgage Lenders data. As the CML figures are not seasonally adjusted it said the monthly fall in January was not unexpected. The 10.2% rise on the year.

In Japan, Department store sales in Japan were hit by record snowfalls in some regions in January, slipping 1.1% on year and giving up a 0.8% rise in December, data released by the Japan Department Stores Association showed on Monday.

Japan posts the highest trade deficit in history. The Bank of Japan says its January real export index rose a seasonally adjusted 0.2% m/m to 116.5 (100 for the 2005 base year), posting the second consecutive monthly gain, after +1.1% in December and -2.7% in November. The January reading was the highest since 118.2 in October. The Bank of Japan Governor Masaaki Shirakawa renewed his pledge to maintain the BOJ’s monetary easing while also repeating that the bank’s new explicit 1% inflation goal is similar in nature to the Federal Reserve’s own 2% price target.

Feb. 20	GBP	Rightmove House Price Index (MoM)	4.1%	-0.8%
Feb. 21	AUD	Monetary Policy Meeting Minutes
NZD	Inflation Expectations (QoQ)	2.5%	2.8%
CAD	Core Retail Sales (MoM)	0.0%	0.2%	0.4%
CAD	Retail Sales (MoM)	-0.2%	-0.2%	0.4%
CAD	Wholesale Sales (MoM)	0.9%	0.5%	-0.3%
Feb. 22	AUD	Wage Price Index (QoQ)	1.0%	0.8%	0.7%
EUR	French CPI (MoM)	-0.4%	0.3%	0.4%
EUR	French Manufacturing PMI	50.2	48.7	48.5
EUR	German Manufacturing PMI	50.1	51.5	51.0
EUR	Manufacturing PMI	49.0	49.4	48.8
EUR	Industrial New Orders (MoM)	1.9%	0.6%	-1.1%
USD	Existing Home Sales	4.57M	4.67M	4.38M
Feb. 23	EUR	German Ifo Business Climate Index	109.6	108.8	108.3
EUR	German Current Assessment	117.5	116.5	116.3
EUR	German Business Expectations	102.3	102.0	100.9
GBP	BBA Mortgage Approvals	38.1K	37.3K	36.6K
GBP	CBI Industrial Trends Orders	-3	-13	-16
USD	Initial Jobless Claims	351K	354K	351K
USD	Continuing Jobless Claims	3392K	3460K	3444K
Feb. 24	EUR	German GDP (QoQ)	-0.2%	-0.2%	-0.2%
GBP	Business Investment (QoQ)	-5.6%	-0.4%	1.0%
GBP	GDP (QoQ)	-0.2%	-0.2%	-0.2%
USD	Michigan Consumer Sentiment Index	75.3	72.5	72.5
USD	New Home Sales	321K	315K	324K

Sovereign Bond Auction Schedule

Feb 27-Mar 02 n/a UK Mini Tender

Feb 27 10:10 Italy BOT auction

Feb 27 10:30 Germany Eur 3.0bn Feb 2013 Bubill

Feb 27 11:00 Belgium OLO Auction

Feb 27 12:00 Norway Details bond auction on May 05

Feb 28 01:30 Japan Auctions 2Y JGBs

Feb 28 10:10 Italy BTP/CCTeu auction

Feb 28 10:30 Belgium Auctions 3 & 6M T-bills

Feb 28 15:30 UK Details gilt auctions on Mar 06 & Mar 07

Feb 29 10:10 Sweden Auctions T-bills

Feb 29 10:30 Germany Eur 4.0bn 2.0% Jan 2022 Bund

Feb 29 15:30 Sweden Details nominal bond auction on Mar 07

Mar 01 09:30 Spain Bono auction

Mar 01 09:50 France OAT auction

Mar 01 10.30 UK Auctions 4.0% 2022 conventional Gilt

Originally posted here