GBP/USD Daily Fundamental Analysis for August 1, 2011

The week starts with the release of important manufacturing data from both economies which will provide some clues about the third quarter’s condition after the sluggish growth seen in the three months ended June. As of 08:30 GMT, PMI manufacturing will show an ease in expansion to 51.0 in July from the prior 51.3.

the U.S will release important data, at 14:00 GMT, which is ISM manufacturing for July; the reading is expected to show an ease in expansion to 55.0 compared with June’s reading of 55.3, noting that a reading above 50 means expansion and vice versa. The U.K. and U.S.data may have a significant impact on the pair if they signaled any surprise.

If both readings came in line with expectations, this will add to worries in markets as it will increase expectations the sluggish growth would continue in the third quarter.

In the week ended July 29,U.S.annualized 2q GDP showed a strong slowdown in growth to 1.3% from the revised 0.9% which was 1.9% initially, whileU.K.economy showed an ease in expansion to 0.1% compared with the prior 0.5%.

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