GBP/USD Daily Forecast

Tuesday, Dec 16 2014

Yesterday, from the UK, CPI and PPI data was released. The rate of inflation faced by households has fallen to a 12-year low. The Consumer Prices Index increased by 1.0% in the year to November 2014, down from 1.3% in the year to October. Analysts were forecasting 1.2% increase. The last time the rate was as low as 1.0% was September 2002 and it was last lower than this in June 2002 when 0.6% was recorded.

PPI Input fell by 1.0%, almost in line with market predictions. Input price annual inflation fell 8.8% in the year to November, compared with a fall of 8.4% in the year to October.

In the US session Building Permits and Housing Starts figures were released.Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,035,000, in line with market forecast. This is 5.2% below the revised October rate of 1,092,000 and is 0.2% below the November 2013 estimate of 1,037,000. Single-family authorizations in November were at a rate of 639,000; this is 1.2% below the revised October figure of 647,000. Authorizations of units in buildings with five units or more were at a rate of 367,000 in November.

Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,028,000, also in line with market forecast. This is 1.6% below the revised October estimate of 1,045,000 and is 7.0% below the November 2013 rate of 1,105,000. Single-family housing starts in November were at a rate of 677,000; this is 5.4% below the revised October figure of 716,000. The November rate for units in buildings with five units or more was 340,000.

Focus of the European part of the session tomorrow will be on UK job figures. Decrease of 19,300 is expected in number of unemployed, while average earnings should increase by 1.3%. Also, BoE will release its Meeting Minutes that should show unanimous voting concerning asset purchase, and 2 against 7 votes for interest rate hike. US session should be quite eventful. On a data front CPI figures will be released. Analysts are predicting 0.1% decrease, while Core CPI should raise by 0.1%. Later tomorrow, we can expect a lot of volatility with Fed interest rate decision and following statement though interest rates are not forecasted to change.

Figures to watch:

MPC Asset Purchase Facility Votes/MPC Official Bank Rate Votes (Wednesday 10:30)

Average Earnings Index/ Claimant Count Change (Wednesday 10:30)

CPI (Wednesday 14:30)

FOMC Economic Projections/FOMC Statement/Federal Funds Rate (Wednesday 20:00)

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