GBP/USD Weekly Forecast – 21 November

Friday, Nov 18 2016

Events that marked the week:

Tuesday's session was marked by UK CPI and PPI data. The Consumer Prices Index (CPI) rose by 0.9% in the year to October 2016, compared with a 1.0% rise in the year to September. Although the rate was slightly lower than in September 2016, it remained higher than the rates otherwise seen since late 2014. The main downward contributors to the change in the rate were prices for clothing and university tuition fees, which rose by less than they did a year ago, along with falling prices for certain games and toys, overnight hotel stays and non-alcoholic beverages. These downward pressures were offset by rising prices for motor fuels, and by prices for furniture and furnishings, which fell by less than they did a year ago.

The price of goods bought and sold by UK manufacturers, as estimated by the Producer Price Index, rose again in the year to October 2016. This is the fourth consecutive increase following 2 years of falls and the largest increase since April 2012. Between September and October, total output prices rose 0.6%, compared with an increase of 0.3% the previous month. Factory gate prices (output prices) for goods produced by UK manufacturers rose 2.1% in the year to October 2016, compared with a rise of 1.3% in the year to September 2016. Core factory gate prices, which exclude the more volatile food, beverage, tobacco and petroleum products, rose 1.9% in the year to October 2016, compared with a rise of 1.4% in the year to September 2016.

Focus of the Wednesday's session was on UK job data. For October 2016 there were 803,300 people claiming unemployment-related benefits. This consisted of 541,300 people claiming Jobseeker’s Allowance, 262,000 people who were seeking work and claiming Universal Credit. For October 2016 there were 803,300 people claiming unemployment-related benefits. This was 9,800 more compared with September 2016 and 9,900 more than for a year earlier.

The unemployment rate was 4.8%, down from 5.3% for a year earlier and the lowest since July to September 2005. The unemployment rate is the proportion of the labour force (those in work plus those unemployed) that were unemployed. Average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.3% including bonuses and by 2.4% excluding bonuses compared with a year earlier.

Thursday's session was marked by UK Retail Sales data. In October 2016, the quantity of goods bought (volume) in the retail industry was estimated to have increased by 7.4% compared with October 2015; all store types showed growth with the largest contribution coming from non-store retailing. This is the highest rate of growth since April 2002. Compared with September 2016, the quantity bought was estimated to have increased by 1.9%; there were increases in all store types, except department stores. The largest contribution to growth came from textiles, clothing and footwear stores.

This week markets will be looking at:

Public Sector Net Borrowing (Tuesday 10:30)

Second Estimate GDP (Friday 10:30)

More in this category: « AUD/USD Weekly Forecast – 21 November – 25 November EUR/USD Weekly Forecast – 21 November – 25 November »