GBP/USD Fundamental Analysis January 16, 2012, Forecast

Economic Events

Jan. 16

19:01

GBP

Nationwide Consumer Confidence

 

Highest: 1.681 USD on 17 Nov 2009.

Average: 1.5807 USD over this period.

Lowest: 1.4321 USD on 19 May 2010.

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 Fundementals now. Easy to trade against the USD.

Support:              1.549

Resistance:         1.5325

Current Trend: flat / sideways

At the close of London markets 2012 Jan 13 7:39 GMT  the GBP is trading 1.53903

News this week effecting the Sterling

The latest announcements by U.K. officials referred that the outlook for the British economy will depend on the latest developments in the euro area, thus the pound is expected to be affected by euro zone news and data.

The Italian Treasury sold 9 billion euros of 179-day bills, where the demand increased to 1.7 times, compared to 1.47 times in the last auction while the borrowing cost retreated to 3.251% from the previous auction’s rate of 6.504%. Also, 2013 bills were sold for 1.733 billion euros with a yield of 4.853% from the prior auction’s rate of 7.814%.

On Thursday, the U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16 at 13:30 GMT. At 14:45 GMT, Chicago purchasing manager is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.

The data is expected to affect the pair’s movements yet eyes will be on the selling of 2014, 2018, 2021 and 2022 bills by the Italian Treasury, especially the 10-year notes which recorded a yield of nearly 7% in the last auction, a rate which triggered the ask for a bailout by Greece and Portugal.

With mounting expectations the BoE will add to stimulus as early as in 2012, the pound remains under pressure from expected oversupply.

This just announced, S&P has officially notified the French government of a downgrade and will be contacting other EU governments.

This move will add support to the Sterling and help push it up against its foreign counterparts. We should see a strong opening Monday.

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