Weekly Global Foreign Currency Market Data Forecast for Pound Sterling (GBP)

January 18, 2016 - Written by John Cameron

STORY LINK Weekly Global Foreign Currency Market Data Forecast for Pound Sterling (GBP)

UK Inflation Predicted to Provoke Sterling Volatility Tomorrow

This week’s session in the global FX market is peppered with tier one data releases and analysts forecast pronounced movement for Pound Sterling (currency : GBP) currency pairs as a consequence.

Tomorrow’s session could prove seminal for Sterling, with the publication of December’s UK Consumer Price Index inflation numbers. The official statistics are expected to reveal that the pace of price rises in the British economy remains at close to zero per cent, meaning that the pressure remains well and truly off the Bank of England to increase the domestic cost of borrowing. The Pound could suffer as a consequence.

Chinese GDP Forecast to Cause Market Volatility

A major data release from the world’s second largest economy takes a place a few hours prior to the publication of the UK inflation figures, in the form of official Q4 Chinese Gross Domestic Product numbers.

Some investors find it difficult to fully believe any official data published by China’s authorities, but the market will react to the numbers nonetheless. A year-on-year showing of 6.9% is anticipated from the growth figure – the same as Q3’s result.

Anything below this consensus expectation and the high-yielding Australian Dollar (currency : AUD) and New Zealand Dollar (currency : NZD), whose fortunes remain firmly tethered to those of China’s economy, are forecast to lose support.

American inflation numbers follow on Wednesday afternoon; analysts are looking for a slight increase in the core level of US CPI inflation, (which strips the effects of changes in energy prices out of the numbers), from last month’s annualised 2.0%. Such an outcome will surely send the Pound Sterling US Dollar exchange rate down towards the psychologically significant 1.4000 GBP USD threshold.

ECB Rate Decision to Dominate Trader Focus

Meanwhile, investors will have to wait until Thursday afternoon, when the European Central Bank (ECB) makes its latest policy announcement, for the week’s main risk event.

Global oil prices have slid dramatically since December’s confirmation from the ECB that it would not be increasing the monthly €60bn which it currently allocates to its controversial Quantitative Easing programme.

Any suggestion from ECB President Mario Draghi that the precipitous fall in the price of a barrel of crude either side of Christmas has made a loosening of eurozone monetary policy more likely could see the GBP EUR exchange rate reverse a portion of its recent gains.

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