GBP/USD: Consumer Confidence in the UK Fell in April. Fundamental Analysis of 29.04.2016.
According to the data presented by research company GfK today, consumer confidence index in the UK fell to the negative value of -3. This is the lowest level since the end of 2014. Upcoming referendum in June and debates about membership of the county in the EU negatively affect British consumer confidence index. GfK also mentioned that the decline in the index was caused by the negative evaluation by British people of the economic situation in the country and personal economic prospects.
The index is also negatively affected by the concern about immigration, terrorism, and health care. Referendum of the UK membership in the EU is scheduled for 23 June.
On Wednesday Organization for Economic Co-operation and Development (OECD) said that if the UK’s exit the EU, British economy will fall by 3% by 2020 compared to the chance if the UK would have stayed in the EU. On Wednesday Bank of England president Mark Carney said that if British people vote for the exit from the EU, the Pound may lose 20% of its price. Annual inflation rise may increase by 1.5%.
On Wednesday, preliminary GDP data was released. British GDP rose by 0.4% in Q1 against 0.6% in the last quarter of 2015. On annual basis the rise in Q1 amounted to 2.1% against 2.1% a quarter earlier.
According to preliminary data, British economy has slowed down in Q1 and the slowdown may continue amid preparation of the referendum. Nevertheless, the pair GBP/USD has been growing for the third consecutive week. This week the pair GBP/USD was supported by the interest rate decision of the US Fed and uncertainty about future interest rate increase in the USA in June.
However, the pair may not exceed the level of 1.4625 in advance of the referendum. Due to weak UK macro-economic statistics this week, the pair GBP/USD may return to the levels of 1.4100 and 1.4000 at the beginning of June.