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GBP/USD: retail sales data _18.08.2016

Technical analysis and trading recommendations -

Two overlapping factor (published July FOMC minutes and UK retail sales data for July) contribute to the growth of today, the pair GBP / USD.

The FOMC minutes released yesterday, investors found no clear signals to increase the interest rate in the US in September. Minutes showed that between the leaders of the Fed there is no consensus in the US about monetary tightening in the coming months. The Fed did not take on the obligations regarding the rate increase, making it clear that it will depend on the incoming US economic indicators.

The WSJ The US Dollar Index, which tracks the greenback against a basket of 16 currencies, fell 0.1% immediately after the publication of protocols.
Recent weak data on GDP and productivity in the US in Q2 complicate decision making about imminent rate hikes.

The probability of increasing rates in the US in September is currently estimated at about 12%. Most likely is rate hike in December by 0.25%.

The president of the Federal Reserve Bank of St. Louis James Bullard also said Wednesday that it expects this year's increase rate only once, by a quarter percentage point, and this could happen in any month until the end of the year.

Data on retail sales in the UK in July exceeded the expectations of economists.
Retail sales in the UK in July, the first month after the referendum on Brexit, grew by 1.4% and by 5.9% in annual terms (the forecast expected to grow by 0.2% and 4.2%, respectively).

In response to the publication of the GBP / USD pair rose over 100 pips, reaching nearly 2-week high near 1.3175 mark.
These turned out to be an unpleasant surprise for investors, is placed on the reduction of the pound and the pair GBP / USD.

Nevertheless, in spite of the current promotion, the continuing uncertainty about the future of the UK economy will continue to put pressure on the position of the pound on the foreign exchange market in the medium term. Gloomy predictions of many economists point to a fall in the pair GBP / USD to around 1.2000 by the end of the year and the mark of 1.1000 by the end of 2017.

And any strengthening of the GBP / USD pair many investors will be treated as another opportunity to open short positions.

The decision of the Bank of England with respect to monetary policy in the UK will be taken at the next meeting of the Bank on 15 September.

Today at 12:30 (GMT) will be published data on initial applications for benefits for unemployment in the US last week, and at 14:00 - the index of leading indicators for July in the USA.

Thursday, 18 Aug, 2016 / 12:40

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