GBP/USD Daily Forecast - 30 December

There were no data releases from the UK yesterday, however Sterling still remains on the downside as low inflation in the UK has pushed back market expectations of an interest rate rise as far as 2016. Another factor that added to the concerns is that UK unemployment was unchanged at 6.0% in three months to November, while decline to 5.9% was expected. Final GDP reading showed 0.7% growth in third quarter, but BoE is announcing a possible slowdown at the end of the year.

Sterling little changed at the beginning of the week

GBP/USD Daily Forecast - 29 December

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.

Euro lower amid Boxing Day trading

Euro is traded lower in a tighter-range Friday's session with some of the European banks being closed in observance of Boxing Day holiday. Euro remains under pressure as Eurozone economy is far from exit gates of recession and with growth rate slowing down even in Germany. Deflation concerns persist, with inflation at only 0.3%, far away from ECB 2% target despite all the monetary measures, which means that we could be seeing another round of additional monetary stimulus quite soon.