GBP/USD – British Consumer Confidence at highest point since 2010

on Jul 31, 2013

**, Wednesday 31 July:** GFK’s UK Consumer Confidence for July came out just after midnight BST today, beating expectations for -19 with a solid reading of -16, well up on the prior period’s -21 and the highest level since 2010. The number indicates that the recovery is gaining steam, with consumer projections for the general economic situation and personal finances at their most optimistic since onset of the global financial crisis. Naysayers point to the UK’s unusually warm and sunny weather during July as having possibly helped to lift consumer morale.

The reading did not boost sterling, which is down 1.22 percent to this point in the week and currently trading around 1.5210, its lowest level since 18 July after weaker than expected Eurozone releases. As we noted in the GBP/USD weekly fundamental outlook on Monday in comparing current year UK Consumer Confidence with the 1990s, the trend is upward sloping, but the pound may lag the measure.

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The pound’s performance today will likely be determined by the US economic updates for release this afternoon.
ADP Employment Change for July is due out at 13.15 BST with expectations for a minor drop of around 8,000 to 180 000 new jobs in the private sector.
The US GDP for the second quarter is set for release at 13.15 BST, with a market consensus for a 1.1 point increase in Real GDP q/q. The figure for the first quarter was revised to 1.8 percent in the third estimate, down from 2.4. Analysts are expecting the US GDP Price Index to range from 0.4 to 1.6 percent with consensus at 1.1 percent, slightly down on the first quarter’s 1.2.

Chicago PMI for July is scheduled at 14.45 BST with analysts expecting a strong reading of 54.0 compared to the 51.6 figure in June.
The FOMC Interest Rate Decision is due out at 19.00 BST and is widely expected to leave rates unchanged, with the Fed’s funds target at a range of zero to 0.25 percent. Traders’ attention will be focused on any forward guidance from the chairman, Ben Bernanke, and his characterization of the US economy.


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