GBP/USD Weekly Forecast - 16 April

Sunday, Apr 15 2018

GBP/USD had a great week rising to the highest levels since January as the mood in markets improved. A very busy week awaits the pound: inflation, employment, and retail sales stand out.

China and the US traded pleasantries about trade relations, Trump mused about returning to the TPP, and also hope for Brexit talks on trade which begin now all pushed the pair higher.

Worries about Syria were ignored. Over the weekend, the US, the UK, and France launched airstrikes against the Assad regime’s chemical weapons but the wider effects may be limited.

In the US, the Fed expressed confidence about the economy and inflation reaching its targets while inflation indeed increased to 2.1% on the core.

Major events in the coming week:

Rightmove HPI: Sunday, 23:01. Britain’s earliest House Price Index last showed a big rise of 1.5% m/m in March. This time, the report for February may be more modest.
CB Leading Index: Monday, 13:30. The composite index by the Conference Board has remained flat in January. The report for March may show an uptick.
Jobs report: Tuesday, 8:30. The last jobs report was quite mixed. Wages rose by 2.8% y/y in January but the Claimant Count Change rose by 9,200 in February, worse than expected. The unemployment rate reverted back to 4.3% in January and that is unlikely to change for February. The ongoing acceleration in pay implies a case for a rate hike in May. A rise to 3% is expected. However, another rise in jobless claims could trigger worries: an increase of 13.3K is forecast.
Inflation report: Wednesday, 8:30. Inflation slowed down to 2.7% in February, off the edge of the 1-3% targeted by the Bank of England. The same level is expected for March. The stronger pound has pushed prices of imported goods lower. Core CPI was at 2.4% (2.5% projected now) while the PPI Input fell by 1.1% m/m back then (+0.4% expected now).
Retail Sales: Thursday, 8:30. After two disappointing months, sales rebounded by 0.8% in February. A drop of 0.5% is projected for March, countering that rise.
Jon Cunliffe talks, The Dy. Governor of the BoE will speak at the IMF Meetings in Washington.
Michael Saunders talks: Friday, 9:30. The external member of the Monetary Policy Committee (MPC) speaks in Glasgow and may reiterate his hawkish views.