© Dukascopy Bank SA
As Dukascopy traders suggested last week, the Cable was moving in a more balanced way, compared with the EUR/USD cross. More than 54% of them expected the Sterling to close higher against the Buck by Friday of the week ended Aug 21, slightly less than 63% who estimated gains for the Euro versus the American currency. The Pound has initially started trading on a bearish note, while falling below the 1.56 mark. However, a very noticeable spike on Tuesday was predominantly caused by the better than forecasted UK inflation data. Consumer prices in Britain used to rise 0.1% in July, even though analysts projected a zero change for the gauge. This statistical event provided the UK currency with substantial bullish impetus, as a result of which the pair surged as high as 1.57. The Cable, however, remained mainly unchanged for the rest of the researched period, despite a mix of events that could potentially provoke both gains and losses. Among them, UK retail sales surprisingly added just 0.1% in July. On the other hand, GBP/USD was actively supported by US Dollar's selloff across the board, which was fueled by Chinese economic growth fears.
Nevertheless, the next trading week assumes the Sterling will rally further, as now almost 82% of Dukascopy Community members are strongly positive with respect to this currency. The mean estimate for Aug 28 is placed around 1.5750, or some 50 pips above the previous Friday's closing price. According to al_dcdemo's long-term views "Despite not-so-hawkish BOE at the last ("Super Thursday") meeting, expectations of rate hikes in 2016 will most likely drive this pair higher." In the short-term, the most important event in Britain is considered to be the second GDP release on Thursday at 8:30 GMT. The same time, the Bank of England's Governor Mark Carney will speak at the Federal Reserve Bank of Kansas City Symposium in Jackson Hole.
© Dukascopy Bank SA