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GBP/USD Daily Forecast - 29 December

Friday, Dec 26 2014

Sterling fell in the course of the session on Tuesday all the way to below 1.55 handle after UK growth was revised down from 3% to 2.6% cent year-on-year in the third quarter. However it managed to rebound and go above 1.5550 handle around which it was for most of the Friday's session. This also points that we could be seeing slower growth in the fourth quarter, which BoE officials have been announcing for some time now. With falling inflation this is just another reason why despite optimistic predications in the middle of the 2014, it is not likely that we are about to witness BoE's rate hike before the second part of 2015.

On the other hand Fed could be the first to raise its interest rates in 2015. In its latest Meeting Minutes FOMC members said that labour market conditions will be carefully watched when deciding on rate hike. As for now, labour market is showing signs of constant improvements, while inflation remains within target. 

 

Monday's session should be a steadier one with no data releases both from UK and USA. Since holiday season and New Year will marked next week we believe that there will be no huge movements and Sterling is likely to remain within its consolidation range.

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