GBPUSD news - page 16
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U.K. Inflation Lowest Since 2009
U.K. inflation slowed marginally as expected in August on falls in prices of motor fuels and food, data from the Office for National Statistics revealed Tuesday. Factory-gate prices declined for the second straight month indicating benign inflationary pressures in the pipeline.
Consumer prices rose 1.5 percent year-on-year in August, slower than the 1.6 percent rise in July. The figure came in line with economists' expectations and matched the May inflation, which was the lowest since October 2009.
Inflation has remained below the 2 percent target in each month of 2014. In the latest three months, food and non-alcoholic beverages fell 1.1 percent on the year. Similarly, prices of motor fuels decreased 5.7 percent.
Food and non-alcoholic beverages prices slid 1.1 percent annually in August, the steepest fall since early 2003.
Month-on-month, consumer prices advanced 0.4 percent, reversing the 0.3 percent drop in the prior month.
Core inflation that excludes energy, food, alcoholic beverages and tobacco, rose slightly to 1.9 percent in August from 1.8 percent in July.
Consumer price inflation is likely to stay around 1.5 percent in the near term and it should remain clearly below 2 percent through the early months of 2015, IHS Global Insight's Chief UK economist Howard Archer said.
Although the low inflation outlook is unlikely to prevent the Monetary Policy Committee from raising interest rates entirely over the next year or two, it should strengthen the case for the MPC to raise them more gradually than in past tightening cycles, Samuel Tombs, a senior U.K. economist at Capital Economics, said.
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FYI, 7 Economic Events for British Pound Traders in this week.1. U.K. Consumer Price Index (Sept. 16, Tues 9:30 am GMT)
AKA CPI is the change in the price of goods and services purchased by consumers. This is considered the UK's most important inflation data because it's used as the central bank's inflation target. The headline figure already slipped from 1.9% to 1.6% in July and it is slated to print another drop to 1.5% for August, far below the Bank of England’s 2% annual inflation target.
Another decline in core inflation might lead to more weakness in Mr. British Pound against his counterparts, as this would suggest that the BOE probably shouldn’t start tightening monetary policy just yet.
2. U.K. Average Earnings Index (Sept. 17, Wed 9:30 am GMT)
Change in the price businesses and the government pay for labor, including bonuses. This is also a leading indicator of consumer inflation - when businesses pay more for labor the higher costs are usually passed on to the consumer. So a better than expected reading would be good for Mr. British Pound. However, in the past few months we've had lower than expected readings which could repeat this month as well.
3. U.K. Claimant Count Change (Sept. 17, Wed 9:30 am GMT)
Change in the number of people claiming unemployment; For the month of August, the number of claimants is expected to drop by 29.7K, a slightly slower pace of unemployment reduction compared to July’s 33.6K decline.
4. U.K. Jobs Data (Sept. 17, Wed 9:30 am GMT)
The UK jobless rate is projected to improve from 6.4% to 6.3% in August, which might revive rate hike expectations once more. Analysts are expecting to see a 0.5% rebound in average earnings, which might boost the pound this time.
5. BOE Monetary Policy Committee Meeting Minutes (Sept 17, Wed 9:30 am GMT)
The pound’s reaction to the U.K. jobs release might be short-lived though, as the BOE is also set to print the minutes of its latest monetary policy meeting at the same time.
Although the U.K. economy printed a few disappointing reports after the BOE’s July meeting, market watchers are still expecting to see at least two votes supporting a rate hike. Any additional rate hike votes could be even more bullish for Mr. British pound.
6. U.K. Retail Sales (Sept 18, Thurs 9:30 am GMT)
Normally a bigger deal than what it would be this Thursday, Pound traders would see a bit of a volatility ahead of Scottish Independence Vote when the change in the total value of inflation is announced in the morning. Consumer spending is expected to pick up pace for the month, with a projected 0.4% increase in retail sales.
Retail sales in the U.K. has been down since May when the economy saw a 0.5% decline in spending, followed by a couple of months of mere 0.1% uplifts. This has mostly been blamed on seasonal factors and the fact that wages and price levels have been falling. A stronger than expected recovery in spending could lead to a rise in Mr. British pound, while another meh retail sales figure could change the scenario.
7. Scottish Independence Vote (Sept 18, Thurs)
As mentioned above, among the hot economic events lined up in the U.K. this week, the Scottish referendum is perhaps the most anticipated one. The outcome could have long-term effects on political and economic stability.
UK Household Finance Sentiment Improves As Earnings Rise
British households' pessimism regarding their financial situation continued to ebb in September as pay growth remained strong, results of a survey by Markit Economics and financial information provider Ipsos Mori revealed Wednesday.
The Markit Household Finance Index, which measures overall perceptions of financial well being and aims to track consumer behavior, rose to 42.6 from August's revised 42.3. A score below 50 suggests pessimism regarding finances among the U.K. households.
The latest figure was the joint-second highest since the survey began in February 2009, Markit said, suggesting easing pressure on household finances.
The survey was conducted among approximately 1,500 individuals aged 18-64, between September 10 and 15.
The fastest increase in income from employment since July 2013, largely supported household finances in September. Pessimism regarding job security was the lowest since the survey began in early-2009.
Britons employed in the finance and business services sector were the least pessimistic in September, while those working in education, health and services sector and media, culture and entertainment sector were the most downbeat.
Both households' savings as well as cash available to spend continued to fall in September. That said, cash available declined at the slowest pace in just over a year.
The index measuring the outlook for financial well being over the next 12 months dropped to 47.5 from 48.7 in September, suggesting moderate pessimism.
Jack Kennedy, senior economist at Markit, "Further improvements on the wage front will be key to determining the consumer outlook; with the Bank of England now forecasting a return to real wage growth by the middle of next year there appears to be light at the end of the tunnel."
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Twitter Suggests Scotland Is Going Solo
Opinion polls remain inconclusive as to whether Scotland will decide to secede tomorrow, as the final hours tick by before a referendum. Still, an analysis of Twitter messages by academics at Oxford University has shed a little more light, suggesting that the momentum is with those who favor independence.
Karo Moilanen, a visiting academic at the university, has dissected more than 1 million tweets in the past month. The "yes" campaign has generated more than 782,000 missives, compared with 341,000 for those backing the "no" movement. Both camps saw a dive in activity yesterday, though those backing the Scottish nationalists were still twice as active as the unionists:
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U.K. retail sales rise 0.4% in August
Retail sales in the U.K. rose in line with market expectations in August, underlining optimism over the country’s economic outlook, official data showed on Thursday.
In a report, the U.K. Office for National Statistics said retail sales increased by a seasonally adjusted 0.4% last month, meeting forecasts. July retail sales were revised down to a flat reading from a previously reported 0.1% gain.
Year-on-year, retail sales rose at an annualized rate of 3.9% in August, below expectations for a 4.1% gain, after rising at a rate of 2.5% in July.
Core retail sales, which exclude automobile sales, increased by a seasonally adjusted 0.2% last month, compared to forecasts for a 0.3% gain, after rising 0.4% in the preceding month.
GBP/USD was trading at 1.6300 from around 1.6310 ahead of the release of the data, while EUR/GBP was at 0.7904 from 0.7901 earlier.
Meanwhile, European stock markets remained higher. London’s FTSE 100 tacked on 0.2%, the DJ Euro Stoxx 50 advanced 0.7%, France's CAC 40 inched up 0.65%, while Germany's DAX rose 0.85%.
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Pound 2-Year High Shows Bets Scotland Votes ‘No’
Currency traders are betting that Scottish nationalists’ bid for independence will fail today.
The pound strengthened to the highest level versus the euro in two years as Scotland’s electorate voted on whether to end its three-century-old union with the U.K. Sterling appreciated versus all but one of 16 major peers as a poll by Ipsos Mori showed 53 percent of those surveyed said they would vote “no.” U.K. government bonds tumbled.
“The ‘no’ camp is firmly expected to win now,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “Consequently, the market is buying the pound in order to remove the hedges that were put in play in case of financial turmoil and asset collapse in the face of a ‘yes’ vote.”
The pound appreciated 0.3 percent to 78.81 pence per euro at 2:20 p.m. London time after touching to 78.54 pence, the strongest level since August 2012. Sterling gained 0.6 percent to $1.6370, having touched $1.6387, the most since Sept. 4.
Gauges of future price swings for the U.K. currency have surged this month as investors grappled with the implications of a potential “yes” vote, while options on the pound versus the euro yesterday were the most bearish since 2008.
“The market seems to be dismissing a ‘yes’ vote,” said Harry Adams, head of trading at Argentex LLP, a currency advisory company in London. “Sterling does seem relatively cheap around these levels so a lot of people are piling in now on the basis of the head ruling over the heart. The scaremongering is starting to wane. The market certainly believes a ‘yes’ vote is being discounted.”
The 10-year gilt yield rose seven basis points to 2.58 percent. The 2.75 percent security due in September 2024 fell 0.59, or 5.90 pounds per 1,000-pound face amount, to 101.45.
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U.K. Retail Sales Increase Despite Fall In Food Sales
U.K. retail sales increased in August as sale of high powered vacuum cleaners and furniture, offset the decline in food store demand.
Including auto fuel, retail sales volume increased 0.4 percent in August from July, when it remained flat, the Office for National Statistics reported Thursday. The monthly growth rate matched expectations.
Food store sales fell 0.7 percent, while non-food store sales increased 1.6 percent from July due to a 3.8 percent rise in household goods store sales. Consumers purchased high powered vacuum cleaners before the EU energy regulation came into force at the end of August.
Meanwhile, sales excluding auto fuel grew 0.2 percent month-over-month, which was slower than the 0.4 percent rise seen in July and an expected 0.3 percent increase.
Retail sales volume including auto fuel, grew 3.9 percent year-on-year in August, faster than the 2.5 percent rise in July. This was the 17th consecutive increase in sales volume. Sales were expected to grow by 4 percent.
At the same time, annual growth in sales excluding auto fuel rose to 4.5 percent from 3.3 percent, but below the 4.8 percent rise forecast by economists.
During the three months to August, retail sales volume rose 0.5 percent from the previous three months.
Retail sales are going to see significantly reduced growth in the third quarter compared to the second, which reinforces the assessment that softer consumer spending will contribute to GDP growth slowing slightly in the third quarter, IHS Global Insight's Chief UK Economist Howard Archer said.
However, with the sharp fall in the unemployment rate and indication of real wages picking up next year, Samuel Tombs, a senior UK economist at Capital Economics said he doubt that the recovery in retail spending will lose much momentum.
The Organization for Economic Cooperation and Development forecast U.K. GDP to grow 3.1 percent in 2014 and 2.8 percent next year.
A report released by the Confederation of British Industry today showed that industrial orders declined more than expected in September as export demand fell to a 21-month low.
According to the Industrial Trends survey, the overall order balance declined to -4 percent from +11 percent in August. The balance was expected to fall to 9 percent. The export order balance came in at -24 percent in September, compared to -3 in August.
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Seven Lessons From The Eurozone On The Dangers For An Independent Scotland
With less than 48 hours until Scottish voters head to polling booths to decide the future of their country I believe there are a few lessons from recent history which they should keep in mind when making their voting decisions.
Economists from Paul Krugman to Tyler Cowen have touched on how an independent Scotland could face similar problems to those of certain Eurozone countries in recent times. I would like to tease this narrative out a bit further with some specific examples around the Scottish currency options – sterling currency union, sterlingisation (unilateral use of sterling) or joining the euro.
These examples are not meant to lecture those Scots that favour independence on the error of their ways, but they are a cautionary tale. There are of course plenty of other political and cultural factors which will feed into the voting decision but, in particular for those undecided votes, the recent experiences of the Eurozone do suggest that there are risks from an economic and currency perspective which they will want to keep in mind on Thursday.
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First YouGov Poll Predicts The Scottish "No's" Have It With 54% Of The Vote
First YouGov Poll Predicts The Scottish "No's" Have It With 54% Of The Vote
Well, they nailed it