GBP/USD Fundamental Analysis October 22, 2013 Forecast

Analysis and Recommendations:

The GBP/USD is trading at 1.6138 down by 30 points as traders favor the US dollar which gained 14 points in today’s session. The UK labor market continues to improve, data from the Office Of National Statistics (ONS) showed on Wednesday. The sterling pound had been strengthening ahead of the release and spiked further after the data was unveiled. While the unemployment rate for the June-August period remained unchanged at 7.7% compared to the prior running 3-month period of May-July, the number of people claiming jobless people fell the most in 16 years.

Specifically, the claimant count fell by 41,700 in September compared to a consensus estimate of 24,300. Additionally, the prior month’s figure of 32,600 was revised higher to 41,600. On the other hand, earnings growth slowed more than expected, which bodes well for future hiring but is negative for workers’ standard of living. Average weekly earnings growth slowed to 0.7% in the three months to August compared to a year earlier, and down from 1.2% in the prior 3-month period. The lower wages is in contrast to Tuesday’s data which showed that inflation remained steady in September.

Analysts continue to consider whether the unemployment rate will fall to the Bank of England’s target of 7% earlier than its forecast for the third quarter of 2016. Such a scenario – with the knockout clause breached – would force the central bank to backtrack on its ‘forward guidance’. Investors are already pricing in a chance of a rate hike in early 2015.

Tomorrow traders will see the delayed US jobs data which could cause some market volatility. Strategists cautioned that sterling could lose momentum given recent the steep ascent as investors would be reluctant to buy the currency at such high levels. Also, its gains would be capped as sellers emerge at higher levels. British retail sales data on Thursday beat forecasts, supporting hopes that the economy recorded strong third-quarter growth. Preliminary gross domestic product data is released on Friday next week. In the United States, once lawmakers agreed a last-minute deal to postpone the threat of US debt default, attention turned to the economic impact the 16-day government shutdown would have. This hurt the dollar as it increased bets that the US Federal Reserve could delay trimming its monetary stimulus.

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.    

Economic Data October 21, 2013 actual v. forecast

 

Upcoming Economic Events that affect the CHF, EUR, GBP, CAD and USD

Government Bond Auction

Date Time Country 

Oct 22 00:30 Japan

Oct 22 08:30 Spain

Oct 23 09:30 Germany

Oct 23 14:30 Sweden

Oct 23 15:30 Italy

Oct 24 11:00 Norway

Oct 24 15:00 US

Oct 24 15:30 Italy

Oct 24 17:00 US

Oct 25 15:30 Italy