Monday 17th GBP/USD to Decline
Although British data on Monday has little consequence in terms of the provocation of wider market movement, the US data scheduled for release has been forecast to cause declines for the Pound Sterling to US Dollar (GBP/USD) exchange rate.
Rightmove House Price figures may have an influence on Sterling movement as the only data publication pertaining to the UK on Monday.
US data will be far more influential than the British data. Industrial production and Manufacturing Production have the potential to influence foreign currency movement as well as US Dollar changes. Industrial production is forecast to drop from 1.0% to 0.2% which could cause a US Dollar downtrend.
UPDATE
The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.5663.
Given the sparseness of the British economic calendar on Monday, the Pound’s movement is generally as a result of foreign currency changes. The few British data publications have produced mixed results which has had a minimal impact on Sterling movement. Rightmove House Prices declined from 2.6% to -1.7% in November, but advanced from 7.6% to 8.5% on a yearly basis.
US data, due for publication later on Monday afternoon, has the potential to provoke volatility for the Pound to US Dollar exchange rate. Industrial Production and Manufacturing Production are both forecast to decline.
Tuesday 18th GBP/USD to Fluctuate
With several important British data publications on Tuesday morning and US data due out on Tuesday afternoon, the Pound to US Dollar exchange rate is likely to fluctuate.
Those invested in the Pound will be looking towards the Consumer Price Index to gauge Sterling movement. The Producer Price Index will also be of interest to those trading in Sterling.
In terms of US data, the NAHB Housing Market Index and the Net Long-term TIC Flows will have the greatest influence over US Dollar volatility.
UPDATE
The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.5656.
On Tuesday morning the Pound has appreciated against the US Dollar despite concerns that British inflation data will disappoint. The UK Consumer Price Index is forecast to remain unchanged at 1.2%. The data is of particular importance because the Bank of England has targeted inflationary issues as one of the conditions for hiking the benchmark interest rates.
The US Dollar, meanwhile, is trending lower against as a result of Monday’s disappointing data. Of particular detriment was Industrial Production which failed to meet with the median market forecast of a drop from 0.8% to 0.2%, with the actual result dropping to -0.1%.
Wednesday 19th GBP/USD to Soften
If the last few publications have set a precedent, the Pound is likely to soften across the board on Wednesday after the Bank of England publishes minutes from its most recent monetary policy meeting. Sterling depreciation will be magnified if the two hawkish policymakers opt to tow the party line and get behind delaying the rate hike.
Those invested in the US Dollar will be awaiting the minutes from the Federal Reserve’s most recent policy meeting. Given that the Fed opted to abolish quantitative easing in its last meeting, the minutes are likely to be relatively hawkish.
US Housing Starts and Building Permits data may also be of interest to those trading with the US Dollar.
Thursday 20th GBP/USD to Soften
The most influential British data publication on Thursday will be Retail Sales. Given that retail sales declined previously, it is highly possible that October’s results will also show declination. This is especially true when you consider that the strange weather has caused a delay to winter purchases.
The US data publications which are most likely to cause volatility include the Consumer Price Index, Initial Jobless Claims, Continuing Claims, Manufacturing PMI, Philadelphia Fed, Existing Home Sales and Leading Indicators.
The US inflation data will of particular importance. Last week William Dudley, of the Federal Reserve Bank of New York, commented; ‘Adjusting for the fall in the inflation risk premium, inflation expectations appear to have declined much less than implied by TIPS inflation break even measures.’
As industry expert Jessica Menton highlights; ‘CPI measures how much Americans pay for everything from big-ticket items such as cars and refrigerators to rent and doctor’s visits. Inflation has declined in recent months after picking up in the second quarter as a stronger US Dollar, coupled with slower economic growth in China and Europe, have weighed on import prices. The previous report showed consumer prices rose modestly to 1.7 percent in September from a year earlier as energy prices fell 0.7 percent.’
However, if consumer price gains do slow it would deter the Federal Reserve from increasing interest rates and undermine demand for the US Dollar.
Friday 21st GBP/USD to Advance
With a distinct lack of influential US data on Friday, the US Dollar will be subject to foreign currency movement.
For those invested in the Pound Sterling, the Public Sector Net Borrowing data will be of most interest.
At the close of last week the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5629.
