GBPUSD news - page 21
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Pound Falls Versus Dollar as U.K. Inflation Slows
The pound fell versus the dollar as a report showed inflation slowed to the least in five years last month, adding to pressure on the Bank of England to keep interest rates at record lows.
Consumer-price growth slowed to 1.2 percent in the 12 months through September from 1.5 percent in August. That’s the lowest since September 2009 and marks a ninth month below the BOE’s 2 percent target. Data from the British Retail Consortium and KPMG LLP today showed retail sales unexpectedly fell last month from a year earlier. U.K. 10-year government bonds climbed for a seventh day, the longest winning run since August 2011, pushing the yield to the lowest since June 2013.
“Lower inflation, means lower rates, means lower sterling,” said Adam Cole, the head of global foreign-exchange strategy at Royal Bank of Canada in London. “Sterling has gone back to be a fairly conventional interest rate story.”
Sterling dropped 0.7 percent to $1.5970 as of 9:45 a.m. London time. The pound lost 0.3 percent to 79.51 pence per euro and reached 79.56 pence, the weakest level since Sept. 17.
BOE Governor Mark Carney said in a CNBC interview yesterday that weak global demand is producing a benign inflation backdrop.
Like-for-like retail sales fell 2.1 percent in the year through September, the BRC and KPMG said. The median forecast in a Bloomberg News survey of economists was for a 1 percent increase.
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GBP/USD steady near 11-month trough after U.K. jobs data
The pound held steady against the U.S. dollar on Wednesday, hovering near an 11-month trough as data showed that the U.K. claimant count declined less than expected in August, although the unemployment rate fell to the lowest level since October 2008.
GBP/USD hit 1.5878 during European morning trade, the pair's lowest since November 2013; the pair subsequently consolidated at 1.5901, dipping 0.01%.
Cable was likely to find support at 1.5852 and resistance at 1.6103, Tuesday's high.
In a report, the U.K. Office for National Statistics said that the claimant count fell by 18,600 last month, compared to expectations for a decline of 35,000 people. August’s figure was revised to a drop of 33,200 people from a previously reported decline of 37,200.
The report also showed that the rate of unemployment declined to 6.0% in the three months to August, compared to expectations for a reading of 6.1% and down from 6.2% in the three months to July.
Meanwhile, market sentiment remained under pressure amid growing concerns over the outlook for growth in the euro zone after data on Tuesday showed that the bloc's industrial production declined more than expected in August, while July's figure was revised down.
A separate report showed that German economic sentiment deteriorated to the lowest level since December 2012 in October, fuelling further concerns over the euro zone's largest economy.
Elsewhere, sterling was fractionally higher against the euro, with EUR/GBP edging down 0.09% to 0.7953.
Later in the day, the U.S. was to release data on retail sales, as well as reports on producer prices and manufacturing activity in the New York region.
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GBP/USD gains on soft U.S. retail, wholesale pricing data
The pound firmed against the dollar on Wednesday after U.S. retails sales and wholesale pricing numbers came in short of expectations and cast doubts on the strength of U.S. recovery.
In U.S. trading on Wednesday, GBP/USD was up 0.31% at 1.5953, up from a session low of 1.5878 and off a high of 1.6065.
Cable was likely to find support at 1.5878, the session low, and resistance at 1.6227, last Thursday's high.
The Census Bureau reported earlier that U.S. retail sales fell 0.3% last month, exceeding forecasts for a 0.1% decline, after expanding 0.6% in August.
Core retail sales, which exclude motor vehicles and parts, dropped 0.2% in September, defying expectations for a 0.3% gain, after rising 0.3% the previous month.
A separate report showed that U.S. producer price inflation slipped 0.1% in September, disappointing expectations for a 0.1% rise, after a flat reading in August.
September's year-on-year PPI rose 1.6%, missing expectations for a 1.8% gain.
Elsewhere, the Federal Reserve of New York reported that its manufacturing index tumbled to a six-month low of 6.2 in October from 27.5 in September. Analysts had expected the index to tick down to 25.5 this month.
Wednesday's data sent investors rethinking how fast the Federal Reserve will move to tighten policy in 2015, which hammered the dollar.
Meanwhile across the Atlantic, data released earlier revealed that the U.K. claimant count declined less than expected in August, although the unemployment rate fell to the lowest level since October 2008.
The U.K. Office for National Statistics said that the claimant count fell by 18,600 last month, missing expectations for a decline of 35,000 people. The August figure was revised to a drop of 33,200 people from a previously reported decline of 37,200.
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U.K. Firms Continue To Raise Marketing Budget In Q3
Firms in the U.K. revised their marketing budgets upward for the eighth consecutive quarter in the third quarter, the IPA Bellwether report from Markit Economics showed Thursday.
The net balance for total marketing revisions was at 12.6 percent in the third quarter.
The budget was increased to take advantage of the positive trading environment and bolster sales through high-profile and targeted marketing campaigns, the report said.
Data showed that the sharpest upward revisions to marketing budget were to internet and main media advertising.
The report also said that companies were at their most optimistic regarding full-year budgets for seven years, with 26 percent of firms recording an uplift in marketing budgets.
"At this rate, 2014 is panning out to be the best year for growth of marketing spend in the survey's 15-year history." Chris Williamson, chief economist at Markit and author of the Bellwether report, said.
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U.K. Govt Overestimates 2013/14 Borrowing On Cyclical Factors: OBR
The U.K. government borrowing for the previous financial year was less than estimated due to cyclical factors, the Office for Budget Responsibility said Thursday. But these components will disappear as the economy recovers, it said.
"The smaller overestimate of borrowing in our March 2013 forecast for 2013-14 was almost entirely explained by the cyclical component of borrowing being lower than expected, in other words the element that will disappear as the economy recovers," it said.
The March 2013 borrowing forecast error for 2013-14 was a GBP 12.1 billion over-estimate compared with the latest outturn.
Earlier this week, OBR Chairman Robert Chote said income tax receipts are likely to fall short of the government's target for the current financial year despite record employment.
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Bank of England points to interest rate rise in the 'middle of next year'
When the facts change, chime many economists, they change their minds. And today one of the most influential of their number has changed his. Andy Haldane is the chief economist of the Bank of England. In his first television interview since joining the Bank’s powerful Monetary Policy Committee (MPC) he’s told ITV News that interest rates should start to rise much later than he thought only a few months ago.
In June he thought they should rise sooner – which investors then took to mean next month – as the economy picked up steam. He favoured being “on the front foot” to avoid having to act fast and furiously if inflation quickly got out of hand. Today he tells us that the weaker global economic outlook (which threatens ours) and the lack of inflation at home mean rates probably won’t go up for many months.
Investors (in the bond markets) are guessing the middle of next year and he says that’s “not a bad bet”. In central banker terms that is a very clear signal.
Far from fretting about inflation being too high, the Bank is worried it has been below the two per cent target for all of this year and may well slip below one percent, triggering a letter from the Governor to the Chancellor to explain what’s gone wrong. Across the Channel, there are concerns that a stagnating euro area might slip into deflation and stagnation and he says “there must be some risk” to the UK from the Eurozone’s troubles.
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GBP/USD forecast for the week of October 20, 2014
The GBP/USD pair fell initially during the course of the week, but bounce significantly enough to form a nice-looking hammer. What is also interesting about this hammer is that it sits right at the 50% Fibonacci retracement level, and with that we feel that this market should continue to go higher given enough time. We believe that this market could very easily bouncer here and head towards the highs again, which was all the way up to the 1.72 level. Selling at this point in time is not something we are interested in until we break the bottom of the hammer that formed during this week.
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GBP/USD weekly outlook: October 20 - 24
The pound was little changed against the dollar late Friday after data showed that U.S. consumer sentiment rose unexpectedly in October and following dovish remarks by a bank of England official earlier in the day.
GBP/USD was trading at 1.6092 late Friday, off session highs of 1.6125.
Cable is likely to find support at around 1.5940 and resistance at the 1.6180 level.
The dollar was boosted after a report showed that the University of Michigan’s consumer sentiment index unexpectedly rose to 86.4 in October, the most since July 2007.
Another report showed that housing starts rose more than expected last month, bolstering the outlook for the sector.
The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015.
The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.33% to 85.31, but still ended the week lower, its second consecutive weekly decline.
Earlier Friday, BoE Chief Economist Andy Haldane said that rates could remain lower for longer and warned that economic conditions have worsened.
Haldane pointed to slowing global growth, heightened geopolitical and financial risks and the subdued inflation outlook due to slow U.K. wage growth and falling commodity prices worldwide.
Sterling slumped to 11-month lows against the dollar earlier in the week after data showed that the annual rate of U.K. inflation slowed to 1.2% in September, down from 1.5% in August.
The data added to the view that the BoE is likely to keep rates on hold at record lows for longer.
Elsewhere, sterling was higher against the euro on Friday, with EUR/GBP down 0.41% to 0.7928.
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Lending To U.K. Businesses Remains Volatile
The monthly lending flow to UK businesses has been volatile on a monthly basis, but on average, it was broadly close to zero over the past six months, the Trends in Lending report from the Bank of England showed Monday.
Gross lending by all MFIs to UK non-financial businesses increased by 21 percent in the twelve months to August and repayments by businesses also increased.
Further, the bank noted that larger companies have access to more bank lending sources than smaller businesses such as the syndicated lending market.
Contacts of the Bank's network of Agents noted that credit conditions had remained easy for large corporates and availability had remained reasonable for many small and medium-sized enterprises.
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Pound Advances to One-Week High as Home Prices, Confidence Rise
The pound rose to a one-week high versus the dollar after reports showed U.K. home prices gained for a second month in October and consumer confidence increased.
U.K. government bonds climbed for the first time in three days as Barclays Plc pushed back its forecast for the Bank of England’s first interest-rate increase since 2007 to February from November. Minutes of BOE policy makers’ most recent meeting are set to be published on Oct. 22. A report two days later will show the British economy expanded for a seventh consecutive quarter, according to the median estimate of analysts surveyed by Bloomberg.
“It’s seeing a short-term resurgence,” Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London, said of the U.K. currency. “It’s a slightly more positive risk environment and I guess the underlying theme is still going to be data-driven.”
Sterling rose 0.2 percent to $1.6129 at 4:18 p.m. London time after touching $1.6151, the highest since Oct. 9. It fell to $1.5875 on Oct. 15, a level not seen since November. The pound strengthened 0.1 percent to 79.22 pence per euro.
Investors may sell the U.K. currency as it advances, according to Stretch, who doesn’t “see the justification for a squeeze higher to $1.62 or anything of that magnitude,” he said.
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