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GBP/USD Daily Forecast – 19 January

Monday, Jan 18 2016

There were no data releases from the UK yesterday, with Sterling still being rather weak. Strategists are racing to downgrade their forecasts for a currency that is being knocked by a litany of woes from the prospect of record-low interest rates being entrenched for longer and a possible exit from the EU that business leaders say will damage Britain. Analysts’ forecasts for the sterling-dollar exchange rate by June have dropped 2% in the past month, even as they failed to keep up with its almost 5% slide in that period.

The UK currency “doesn’t have many friends at all”, said Jane Foley, a foreign-exchange strategist at Rabobank, whose $1.44 mid-year forecast has already been surpassed. “It’s easy to stack up the negative sterling reasons,” said Ms. Foley. “We’ve had disappointing economic data, inflation is very weak, the market is pushing back expectations about interest-rate hikes, and there will be political issues this year.”

 

Focus of tomorrow's session will be on UK CPI and PPI figures. Analysts are forecasting 0.1% increase in CPI and 1.4% decline in PPI Input. There will be no data releases in the US part of the session.

 

Figures to watch:

 

CPI/PPI (Tuesday 10:30)

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