British Pound Fundamental Analysis and US Dollar Trend Analysis
Currencies / British Pound Feb 05, 2020 - 05:54 PM GMTThis is part 2 of my British Pound Analysis that concludes in a detailed trend forecast for 2020
- British Pound 2019 Review (Part1)
- Political Implications
- Fundamentals
- US Dollar Index
- GBP Long-term analysis
- GBP Trend Analysis
- Elliott Wave Theory
- GBP 2020 Forecast Conclusion
However the whole of analysis was first made available to Patrons who support my work: British Pound GBP Trend Forecast 2020
So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.
Political Implications
Despite continuing mainstream press talking heads obsession with Brexit, basically you can put the TV on mute whenever anyone talks about BrExit because the uncertainty is OVER, Britain is heading for a relatively mild Brexit which the EU will be in full agreement with.
That and given the fact the Tories are now in power for the next 10 years, means politics is no longer a factor in the equation so should result in relative sterling strength against the US Dollar, especially given that the Dollar faces increased uncertainty in the countdown to the November Presidential election.
Fundamentals - GDP
Extreme Brexit uncertainty of Mid 2019 that saw negative quarterly GDP of -0.2% had already started to dissipate during Q3 with it's 0.4% rebound. and I can image a similar result for Q4 when it's published.
Whilst 2020 should see a similar trend for 0.4% per quarter GDP with the Bank of England signaling they are standing by to print money should the UK economy falter post 31st of January. So the UK looks set to achieve at least 1.6% GDP for 2020. Whilst typical economic forecasts range are for just 1% growth (BCC 1%, PWC 1%, BoE 1%).
So it looks like the consensus has failed to properly allow for a Boris bounce, which means there is plenty of room for upside surprise in GDP data to be published during to 2020. Which should strengthen sterling as it reduces the risks of interest rate cuts. Despite the Bank of England's recent announcement that it is prepared to cut rates to boost growth.
US Dollar Index Trend Analysis
A quick technical take on the US Dollar:
1. The US dollars bull market appears to have topped out at 100. So a change in trend is under way of sorts.
2. The dollar has breached significant trend line support which suggests that another run at USD 100 is unlikely anytime soon.
3. There is heavy support under the dollar from 93 to 96.
The overall picture is of the dollar trending sideways during 2020 in the range of about 98.5 to 93.5. So with the USD trading at 97 there is some room for USD downside so somewhat supportive of GBP relative strength by about 3 to 4 cents.
British Pound GBP Trend Forecast 2020
The rest of this analysis has first been made available to Patrons who support my work: British Pound GBP Trend Forecast 2020
- Political Implications
- Fundamentals
- US Dollar Index
- GBP Long-term analysis
- GBP Trend Analysis
- Elliott Wave Theory
- GBP 2020 Forecast Conclusion
Recent analysis includes :
- Silver Price Trend Forecast 2020
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Whilst my next soon to be completed analysis will be a detailed trend forecast for the Stock Market.
Scheduled Analysis Includes:
- UK Housing market series
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- Euro Dollar Futures
- EUR/RUB
- US House Prices trend forecast update
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Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
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