GBPUSD news - page 26
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GBP/USD almost unchanged after upbeat U.K. data
The pound was almost unchanged against the U.S. dollar on Thursday, after the release of upbeat U.K. retail sales data, as the Federal Reserve's latest policy meeting minutes continued to lend broad support to the greenback.
GBP/USD hit 1.5632 during European morning trade, the session low; the pair subsequently consolidated at 1.5674, down just 0.04%.
Cable was likely to find support at 1.5588, Wednesday's low and a 14-month low and resistance at 1.5782, the high of November 13.
The U.K. Office for National Statistics said retail sales increased 0.8% last month, above forecasts for a gain of 0.4%. September retail sales fell by 0.4%.
Year-on-year, retail sales rose at a rate of 4.3% in October, beating expectations for a 3.8% gain, after rising at a rate of 2.3% in September.
Core retail sales, which exclude automobile sales, increased by 0.8% last month, compared to forecasts for a 0.3% rise, after falling 0.3% the previous month.
But the dollar remained broadly supported after the minutes of the Fed's October meeting indicated that officials believe the economic recovery is strong enough to withstand external threats to growth, but offered little additional clarity about when rates could start to rise.
Meanwhile, market sentiment was still under pressure after Japan’s prime minister announced plans this week to delay a sales tax hike due to take place next year, after an increase in April played a part in pulling Japan into a recession.
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GBP/USD slides lower after U.K. public borrowing data
The pound slid lower against the U.S. dollar on Friday, after the release of higher-than expected U.K. public sector borrowing data, while demand for the greenback remained broadly supported.
GBP/USD hit 1.5634 during European morning trade, the session low; the pair subsequently consolidated at 1.5654, shedding 0.22%.
Cable was likely to find support at 1.5588, Wednesday's low and a 14-month low and resistance at 1.5782, the high of November 13.
In a report, the U.K. Office for National Statistic said that public sector net borrowing rose by £7.05 billion in October, after a revised increase of £10.57 billion the previous month.
Analysts had expected public sector net borrowing to rise by £6.90 billion.
The pound had found support on Thursday after data showed that U.K. retail sales rebounded by a stronger than forecast 0.8% in October after a 0.4% drop the previous month.
Meanwhile, the dollar remained supported after the Federal Reserve Bank of Philadelphia said on Thursday that its manufacturing index jumped to a 21-year high of 40.8 this month from 20.7 in October.
Data also showed that U.S. sales of previously owned homes rose to a 13-month high in October.
However, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending November 15 decreased by a less-than-expected 2,000 to 291,000 from the previous week's revised total of 293,000.
The dollar also continued to be underpinned after the minutes of the Federal Reserve's latest meeting indicated that officials believe the economic recovery is strong enough to withstand external threats to growth, but offered little additional clarity about when rates could start to rise.
Sterling was higher against the euro, with EUR/GBP retreating 0.43% to 0.7956.
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Five reasons to sell sterling
EVERY country, bar America, seems to want a weak currency at the moment to hold off deflation. Some, like the Japanese, actively seem to be pushing the currency down. Sterling may have fallen off the radar but it has five key weaknesses.
Political uncertainty. Despite last night's by-election result, UKIP probably won't win many seats in the May 2015 election but it is frighteing the other parties, and prompting them to question their policies and their leaders. The Tories may lose seats to Labour as a result of UKIP's surge but Labour will lose just as many seats to the Scottish National Party, as things stand. Paddy Power, the bookmaker, is pointing to seat totals of Labour 287.5, Conservative 283.5, LibDems 28.5, SNP 21.5 and UKIP 6.5. No two parties (save a highly unlikely grand coalition of the big two) could form a majority under such an outcome (326 seats are needed). So there could be two elections in 2015, plus a possible referendum on exit from the EU in 2017. If Cameron fails to win re-election in May, he could be out as leader of the Tory party and replaced by a Eurosceptic. None of this will be appealing to international investors.
Lack of rate support. Earlier in the year, the pound passed $1.70 to the dollar on hopes that the UK would be the first major economy to increase rates; some thought it would happen in 2014. But the Bank of England has been sounding more and more dovish; late 2015 seems more like it.
Current account deficit. Gone are the days when a trade deficit meant automatic currency depreciation. But it is a negative, other things being equal. Britain failed to close its current account gap when sterling fell in 2008-09 and now has a shortfall of 4.4% of GDP, one of the largest gaps in the OECD.
Fiscal deficit. For all the talk of austerity, Britain still has a substantial deficit of 4.5% of GDP (worse than France, a country British people are fond of lecturing). Recent economic growth has been accompanied by poor tax revenues, as many of the jobs created have been in low wage positions, below the income tax threshold. After seven months of the current fiscal year, the deficit is £64.1 billion, £3.7 billion higher than at the same stage last year.
A slowing economy. Although the UK economy surprised on the upside earlier in the year, momentum may be slowing. The housing market is overvalued and losing steam. The good news on unemployment has been accompanied by terrible news on productivity. Russell Jones of Llewellyn Consulting writes
Whether measured on the basis of output per head or per hour, UK productivity has barely begun to recover from the crisis, and remains some 20% adrift from its pre-2008 trend in marked contrast not just to the experience following previous recessions, but relative to most of the UK’s major competitors
Now, of course, all exchange rates are a two-way bet and the obvious retort is "sell sterling against what?" Well, the dollar for one. The US has a faster-growing economy, a smaller budget deficit, a smaller trade deficit, and is just as likely to raise rates. Yes, US politics are dysfunctional but the next election is not for two years and there is no equivalent of the Brexit issue. Admittedly, one should be suspicious that everyone is bullish on the greenback but arguably all the above bad news on the UK has not been absorbed.
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GBP/USD forecast for the week of November 24, 2014
The GBP/USD pair fell initially during the course of the week, but as you can see found a little bit of support below in order to form a stubby little hammer. We believe that a bounce could be coming, but quite frankly there’s so much resistance above that we think this bounce will end up being a nice selling opportunity in a market that is most certainly negative. We like selling the British pound, and we believe that the US dollar will continue to be the strongest currency in the Forex world.
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Pound edges lower vs. stronger dollar
The pound edged lower against the U.S. dollar in quiet trade on Monday, as demand for the greenback remained broadly supported, while Friday's U.K. data continued to weigh.
GBP/USD hit 1.5629 during European morning trade, the session low; the pair subsequently consolidated at 1.5646, slipping 0.08%.
Cable was likely to find support at 1.5588, the low of November 19 and resistance at 1.5737, the high of November 20.
Demand for the dollar continued to be underpinned after the minutes of the Federal Reserve's October meeting indicated last week that officials believe the economic recovery is strong enough to withstand external threats to growth, but offered little additional clarity about when rates could start to rise.
The Fed wound up its asset purchasing stimulus program last month and is expected to start raising rates around September 2015.
The pound weakened on Friday after the U.K. Office for National Statistic said that public sector net borrowing rose by £7.05 billion in October, after a revised increase of £10.57 billion the previous month.
Analysts had expected public sector net borrowing to rise by £6.90 billion.
Sterling was lower against the euro, with EUR/GBP adding 0.16% to 0.7928.
In the euro zone, the German research institute Ifo said its Business Climate Index rose to 104.7 this month, above forecasts for 103.0 and up from a reading of 103.2 in October.
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Pound Advances Against Major Peers as Policy Gap Boosts Demand
The pound rose, approaching a six-year high against the yen, on speculation it will be supported by relatively higher interest rates even as the Bank of England delays increasing U.K. borrowing costs.
Sterling climbed against the dollar before data this week that analysts said will show U.K. gross domestic product expanded in the third quarter. While BOE interest rates are at a record-low 0.5 percent, they are higher than those of the euro area and Japan, where policy makers are embarking on more stimulus measures that tend to devalue local currencies. U.K. 10-year government bonds ended a two-day advance, with yields rising from a five-week low.
The policy “divergence trade is still very much a strong force” even as U.K. data “has been slightly more mediocre than previously,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “Sterling will outperform against all the others” including the yen and the euro which are being pulled down by prospects of new stimulus measures, he said.
Sterling gained 0.8 percent to 185.90 yen at 4:17 p.m. London time after jumping to 186.13 yen on Nov. 20, the highest since October 2008. The U.K. currency rose 0.3 percent to $1.5702. It fell to $1.5590 on Nov. 19, the lowest since Sept. 6, 2013. The pound slipped 0.1 percent to 79.22 pence per euro after reaching 79.03 pence, the strongest level since Nov. 13.
Mizuho’s Jones said he expects the pound to drop to $1.55 by year-end and reach $1.5250 in the first quarter of next year.
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U.K. BBA mortgage approvals fall to 17-month low in October
Mortgage approvals in the U.K. declined to the lowest level in 17 months in October, dampening optimism over the health of the housing sector, industry data showed on Tuesday.
In a report, the British Banker's Association said that the number of new mortgages approved decreased to 37,100 last month from September’s total of 39,300.
Analysts had expected the number of new mortgages approved to decline to 38,500 in October.
GBP/USD was trading at 1.5671 from around 1.5674 ahead of the release of the data, while EUR/GBP was at 0.7931 from 0.7928 earlier.
Meanwhile, European stock markets were mostly higher. London’s FTSE 100 tacked on 0.1%, the DJ Euro Stoxx 50 advanced 0.45%, France's CAC 40 inched up 0.3%, while Germany's DAX rose 0.8%.
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BoE Carney Sees Heightened Degree Of External Risks To U.K.
The geopolitical situation remains difficult and global economic conditions deteriorated, Bank of England Governor Mark Carney said at the Treasury Select Committee hearing on Tuesday.
The combination of geopolitical situation and weak global growth suggests a heightened degree of external risks to the U.K., Carney said.
Ian McCafferty, external member of MPC said the weakness in global growth and the faltering recovery in Eurozone suggest that it would hit the U.K. through not only through trade channel but also financial market volatility.
If the decline in global oil and commodity prices were to persist, it would provide a boost to global activity, McCafferty said.
At the monetary policy meeting, McCafferty continuously voted since August to raise the key interest rate by a quarter point from a record low 0.50 percent.
Policymaker Kristin Forbes said the biggest risks that she worry about today are external.
With greater scope for tightening policy than for loosening, Jon Cunliffe, Deputy Governor for Financial Stability said he is more worried about the downside risks to inflation at the moment
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Pound to Dollar: GBP/USD Downtrend Forecast to Remain
Any recovery in the British pound (GBP) against the US dollar (USD) should be considered as being temporary according to a recent assessment of the GBP/USD pair.
Sterling remains under pressure having failed to consolidate around the 1.5700 USD level in recent days - traders would have grown more confident had they seen stronger buying interest in the pound increase at this round number.
Our last quote on the pound to dollar pairing sees the GBP/USD conversion exchange rate at 1.5725.
The Pound Will Struggle to Find Buyers
Driving the GBP/USD exchange rate lower is the consistent pro-USD environment, in place since mid-year.
The below graphic shows just how clean the move has been for the currency pair (image courtesy of Afex):
Note: The above market rates are not available for international payments as your bank will shift the rate in their favour. However, an independent FX specialist will undercut your bank's offer, thereby delivering as much as 5% more currency in some instances. Find out how.
Furthermore, by placing stop-loss and buy orders a specialist will help protect you against the worst-case currency movements ensuring your currency goes further.
According to Lucy Lillicrap, a risk manager at currency brokerage Afex, the outlook continues to favour the GBP over the USD and a test of 1.5250 is possible:
"If prices can reverse back above the psychological 1.6000 level an intermediate floor might still form here but otherwise rebounds are seen as corrective only.
"Resistance begins at 1.5850 and though some support is apparent towards 1.5500 this leaves room for further GBP weakness over coming sessions.
"Moreover effective demand now appears thin until nearer 1.5250 and given the dominant U.S. Dollar environment discussed elsewhere values will probably struggle to sustain fresh rallies in any case.
"If 1.600 is penetrated a bottom should exist already for 2014. However, elsewhere broader negative technicals imply renewed weakness next year regardless."
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GBP/USD slips lower in quiet trade
The pound slipped lower against the U.S. dollar in quiet trade on Thursday, pulling away from a two-week high as the greenback began to bounce back from Wednesday's disappointing U.S. economic reports.
Trade volumes were expected to remain light on Thursday, with U.S. markets closed for the Thanksgiving holiday.
GBP/USD hit 1.5748 during European morning trade, the session low; the pair subsequently consolidated at 1.5759, shedding 0.21%.
Cable was likely to find support at 1.5647, the low of November 25 and resistance at 1.5889, the high of November 7.
The dollar weakened broadly on Wednesday after data showed that U.S. initial jobless claims rose to the highest level since early September last week, while personal spending rose less than expected.
Durable goods orders rose in line with forecasts, but core durable goods orders fell unexpectedly.
Other reports showed that U.S. consumer sentiment was revised lower, manufacturing activity in the Chicago region slowed and data from the housing sector was mixed.
The pound earlier rose to two-week highs against the greenback, still supported by a report on Wednesday confirming that the U.K. economy grew 0.7% in the July-to-September period, and expanded 3.0% on a year-over-year basis, in line with the preliminary estimates released last month.
Sterling was higher against the euro, with EUR/GBP edging down 0.10% to 0.7911.
The euro found some support after data showed that the number of unemployed people in Germany declined for the second consecutive month in November, while the country’s jobless rate held steady at a record low.
Germany's Federal Statistics Office said the number of unemployed people fell 14,000 this month, compared to expectations for a drop of 1,000.
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