Forex News that Affects the British Pound

Forex News British Pound Sample Chart

When you trade on the forex market you need to use currency pairs.  One of the most commonly traded currencies is the British Pound.  If you are looking at currency pairs with this currency you should know about the forex news that affects it.  Knowing about the forex news will not only help you analyse the currency, but also help you understand the overall movements.

The Country’s Monetary Policy

The monetary policy of a country can have serious effects on the forex rates.  These policies are often used by the central banks to control inflation levels and include interest rate changes.  The reports you should look for with the Pound are the Bank Rate and the Bank of England Inflation Report.  The bank rate information traders need can be found on the Bank of England website and reviewed monthly by the Monetary Policy Committee.

Forex News About Inflation

The price of goods and inflation affect every currency in the world and you need to know what reports to look at.  If the inflation in the country increases there is likely to be depreciation in the value of the currency.  The increase in inflation may also cause the central bank to take action.

The reports you need to focus on for this with the Pound are the CPI and PPI.  These are the Consumer and Producer Price Indexes.  For inflation you should look at the CPI which calculates the price of goods and services for a specific time period.  The reason for the importance of this report is that the Bank of England uses it to identify inflation and whether something needs to be done.  The PPI report is seen as many as the one which tells you what leads to inflation.

Consumer Confidence and Market Sentiment

Market sentiment and consumer confidence can tell a trader a lot about a country and what the currency may do.  These reports are often more helpful to fundamental traders as they tell you about the views of people on the economy of the country.  These views can cause shifting trends in the currency value.  The reports that you should look for are the Nationwide Consumer Confidence report and the GfK Consumer Confidence report.

Both of these reports are based on 5 questions about the consumer’s expectations for the further, the economy and the employment levels of the country.  The difference between the two reports is related to the timeframe used.  The NCCI looks at current expectations and expectations for the next 6 months.  The GfK report looks at the last 12 months and the next 12 months.

Reports on the Trade Balance

The balance of payments that traders look at relate to financial interactions between countries.  There are three accounts that make up the balance, but a forex trader only needs to look at the current account.  This account shows the levels of imports and exports in the country which is the trade balance.  The reports that you should look at are the Trade balance and Current Account reports.  The Trade Balance report is released monthly while the Current Account report is release quarterly.

 

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