Browsing: GBP USD Forecast

After swinging and dancing, the British Pound finished the week almost 300 pips higher. With no significant technical hurdles, only a comeback of the dollar or bad British data can stop it. And what data awaits the Pound? Here are 5 key events to watch for: Halifax HPI, Manufacturing PMI, Services PMI, PPI and of course – the interest rate decision. The first week of June is very promising..

GBP/USD finished the week higher, closing at 1.6187. It already touched the 1.62 mark during Friday’s trade. As aforementioned, technical resistance waits for the British Pound only at around 1.67.

For a complete roundup of this week’s events in the British Pound, read this post: British Pound continues North.

Economic Indicators for the Pound

  1. Halifax HPI: This house price index is one of the most regarded indicators. British real estate was one of the most prominent causes for the current crisis in Britain. Last month, it fell 1.7%, and this time it’s expected to “smooth” its fall and drop by only 1%. It will probably be published on Monday.
  2. Manufacturing PMI: This purchasing manager’s index indicates the mood of Britain’s industry. It’s on a constant rise, but still in the pessimistic zone – under 50. It’s expected to rise from 42.9 to 44.1. Published on Monday at 8:30 GMT.
  3. Services PMI: On Wednesday, the complementary figure for Monday’s Manufacturing PMI will be published. It’s expected to rise from 48.7 to 49.4, on the brink of turning optimistic…
  4. Interest Rate decision: This is one of the most important events for every currency. On Thursday at 11:00 GMT, the Pound will shake. Official Bank Rate in Britain is predicted to stay at the historic low of 0.5%. So, if there’s no surprise with the interest rate, the focus will be on the MPC Rate Statement. The focus has been on the statement for quite some time. In previous month’s the BoE has declared the program. The government has pledged 75 billion Pounds and recently enlarged the program to 125 billion. If another enlargement is announced, the Pound will fall. It’s important to notice the wording of the statement.
  5. PPI Input: Producer Price Index indicates changes in at the manufacturing level. According to CPI figures, Britain still doesn’t suffer from deflation.PPI, published on Friday, should should that it isn’t close: it’s expected to rise by 0.8% after falling by 1% last month. If this figure surprises, the Pound will go wild. Non-Farm Payrolls are published on Friday, so the market will be very shaky anyway…

As we’ve last week, GBP/USD was mostly influenced from the drastic moves in the dollar. The greenback moved up and down across the board, on risk aversion (for example North Korean Bomb) and on risk appetite, when good figures were published in America.

For a general overview of all the week’s major indicators, check out the Forex Weekly Outlook.

In past two weeks, the British Pound has supplied wild moves, even rollercoasters. I’ll keep on updating on this fascinating currency…

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GBP/USD Forecast and technical analysis ► preview of the main events that move the British Pound (Sterling), and especially pound/dollar (cable) during the week. Here are some general data. Scroll down for the latest GBP/USD outlook

Pound/dollar characteristics

GBP/USD is a major pair and certainly one of the first to emerge in modern trade. Its nickname “cable” originates from transmitting the exchange rate over the telegraph cable between the UK and the USA in the 19th century.

Above average volatility characterizes pound/greenback trading. In comparison to other major pairs, stop-loss orders are usually placed at wider margins.

Another tidbit of Sterling trading is that the pair “front-runs” economic publications from Great Britain. We usually see a significant market movement ahead of a release. Leaks, rumors, or sheer nervousness move GBP USD

The pound is a moderate “risk” currency. When the global mood is positive, GBP often gains against the dollar, albeit usually not at the same magnitude as commodity currencies. When markets become risk-averse, Sterling is on the retreat.

Brexit talks and GBP/USD

The biggest market mover of GBP/USD is the surprising decision of voters in the United Kingdom to leave the European Union. This unprecedented move shook up  Her Majesty’s currency. Brexit has sent Pound/USD to levels last seen in 1985 and despite the recovery, Sterling still suffers.

The economy did well in 2016, before and after the EU Referendum, but it slowed down in 2017. On the other hand, the weak pound pushed inflation above the rises in wages. The Bank of England decided to raise rates in November 2017 but clarified it is a one-off. Mark Carney and his colleagues foresee only two hikes in the next three years.

Brexit negotiations were deadlocked for quite some time, but fresh hopes help the pound stabilize. PM Theresa May may agree to pay the high “divorce bill” that the EU demands.

Latest weekly GBP/USD forecast:

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