GBPUSD news - page 33
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BoE's Haldane: BoE Rate to Rise Very Slowly Over Several Years
Interest rates in the UK are not going to surge as they used to before the 2008 financial crisis, the Bank of England Chief Economist and a member of the central bank's rate-setting committee Andrew Haldane said today.
Speaking to the Daily Post while on his regional tour of Wales, Haldane said the BoE is "in no rush to raise rates, the recovery is taking hold nicely, the last thing we want to do is knock the stuffing out of that … At the last meeting we(Monetary Policy Committee) voted unanimously to hold rates where they are."
But he also added that the base interest rate is "historically low and they won’t stay like that forever but when that rise comes it is going to be very gradual," specifying that the hikes could be "half a percent a year for several years."
"I think that is what businesses want to hear, we want to speak directly to businesses, those who are planning to borrow and invest … It is a message to them that they are reasonably safe to do so with the knowledge we are not about to start raising rates," Haldane said.
"We are clear that even when we are through this adjustment and rates are starting to rise we don’t really see rates getting back to those levels. Maybe the new normal for rates might be 2% or 3%, maybe 4%," he added.
Haldane also said growth in the UK is set to be driven by business investment as saying "borrowing costs are low currently, and many firms were telling us a story about wanting to ramp up investment plans … This is something we have seen recently, the recovery has been one led by business investment."
Haldane's colleague at the Monetary Policy Committee (MPC), Kristin Forbes, appears to hold a less dovish view. Speaking in London last week, Forbes said growth in the US and UK is set to keep momentum this year as low inflation should boost spending and investment, which should in turn result in a stronger argument for an earlier rate hike than many people think at the moment.
Forbes, who joined the BoE's rate-setting committee last summer, already expressed her more or less hawkish views back in November last year when she said she put more weight on a stronger global economy and added that she estimated there was less slack in the economy that what the majority of the MPC members thought.
In January, the BoE voted unanimously to maintain the base unchanged at the record low of 0.5% against market expectations of a continuous split among policymakers. Both Martin Weale and Ian McCafferty surprisingly joined the rest of the seven members arguing that "low inflation might persist for longer than the temporary factors implied and concluded that this risk would be increased by an increase in Bank Rate at the current juncture."
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UK House Prices Growth Steady at 2015 Start
The annual house price growth slowed for the fifth month in a row, with average asking prices slowing to a 14-month low of 6.8% in January from 7.2% in December, mortgage provider Nationwide reported today, adding that house prices are currently 2.4% above their pre-crisis peak.
Between December and January, prices continued to rise by 0.3%, up from a 0.2% rise in the previous month and in line with market estimate.
“The further moderation in the pace of price growth is unsurprising, given the slowdown in housing market activity in recent months. The number of mortgages approved for house purchase has been around 20% below the level prevailing at the start of 2014 and surveyors continue to report subdued levels of new buyer enquiries,” Robert Gardner, Nationwide's Chief Economist, commented on the survey.
Gardner also said the reasons for the slowdown in activity remain unclear, as unemployment continued to decline and wage growth has started to outstrip inflation for the first time since the financial crisis and consumer confidence remained elevated.
On the outlook for price growth, the Nationwide survey said that “if the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead.”
Rightmove survey
According to Rightmove's House Price Index survey, prices of properties rose above estimates between December and January by 1.4% from a decline of 2.2% a month before, which analysts said was an unexpected upward price movement as more potential buyers rushed to the market.
Rightmove said the housing market is expected to slow down a bit as election jitters and mortgage restrictions will bite into sentiment, and this should eventually lead to a lower level of transactions compared to the previous year. Rightmove analysts suggested one of the primary reasons for this unexpected increase in upward price pressure stemmed from the cut in Stamp Duty, which boosted buyers' appetite.
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GBP/USD holds steady after mixed U.K. data
The pound held steady against the U.S. dollar on Friday, after the release of mixed U.K. economic reports and as markets eyed the release of U.S. economic growth data due later in the day.
GBP/USD hit 1.5051 during European morning trade, the session low; the pair subsequently consolidated at 1.5058.
Cable was likely to find support at 1.4973, the low of January 26 and resistance at 1.5219, the high of January 28.
In a report, the Bank of England said that net lending to individuals fell to £2.2 billion in December from £3.1 billion in November, whose figure was revised down from a previously estimated £3.3 billion. Analysts had expected net lending to individuals to hit £3.2 billion last month.
Data also showed that U.K. mortgage approvals rose by 60,280 last month after a downwardly revised 58,960 increase in November. Analysts had expected the number of new mortgage approvals to rise by 59,000 in December.
The reports came after data published earlier Friday showed that the U.K. Gfk consumer confidence index improved to 1 this month from minus 4 in December, compared to expectations for a reading of minus 2.
Meanwhile, the dollar remained supported after the Federal Reserve indicated that interest rates could start to rise around mid-year.
Following its policy meeting on Wednesday, the Fed said it would keep rates on hold at least until June and reiterated its pledge to be patient on raising interest rates, while acknowledging the solid economic recovery and strong growth in the labor market.
The greenback was also boosted by data on Thursday showing that U.S. jobless claims fell to the lowest level since 2000 last week.
Sterling was lower against the euro, with EUR/GBP adding 0.11% to 0.7520.
Later in the day, the U.S. was to release preliminary data on fourth quarter growth as well as reports on business activity in the Chicago region and revised data on consumer sentiment.
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GBP/USD forecast for the week of February 2
The GBP/USD pair initially tried to rally during the course of the week, but as you can see sold off to form a shooting star. The shooting star is sitting just on top of the 1.50 level though, and that is massively supportive. In fact, we believe that the support goes all the way down to the 1.48 level so it is going to be difficult to break down from here. It’s not that we don’t think it will, it’s just a matter of taking the easiest trades possible. This is not going to be one of them.
GBP/USD: Sterling Steady Above $1.5, Focus on PMI
Investors are having a hard time every time the currency pair gets close to the $1.50 area, which is heavily defended and the market has failed at these levels so far. Focus has shifted to the UK manufacturing PMI on Monday, which is expected to print 52.7, above the last month's reading of 52.5.
Ahead of the London open on Monday, cable was trading at $1.5055, flat on the day, but still around 60 pips above $1.50.
Furthermore, the US ISM manufacturing PMI is due later in the session and is expected to ease from last month's reading of 55.5 to print 54.5.
"The Bank of England should remain unchanged on Thursday with the more important event next week’s Inflation Report. Today’s UK manufacturing PMI should provide some upside to sterling," analysts at BNP Paribas wrote in a note on Monday.
Technical analysis
GBP/USD has remained in a wider correction phase for the last three weeks after a huge sell-off. The currency cross hovers between the high of $1.5250 and $1.4950 - the range's low.
Spikes are replaced by sell-offs and as long as sterling stays in this trading range its very hard to predict a future move except for the rebounds off support and resistance.
GBP/USD erases losses, holds steady after U.K. manufacturing PMI
The pound erased losses against the U.S. dollar on Monday, supported by upbeat manufacturing activity data from the U.K. although investors remained cautious amid ongoing concerns over Greece.
GBP/USD eased off 1.5030, the session low, to hold steady at 1.5074 during European morning trade.
Cable was likely to find support at 1.4988, the low of January 30 and resistance at 1.5163, the high of January 29.
The pound found some support after market research group Markit said that its U.K. manufacturing purchasing managers' index rose to 53.0 last month from a reading of 52.5 in December. Analysts had expected the index to inch up to 52.6 in January.
Commenting on the report, Rob Dobson, senior economist at survey compiler Markit, said, "At this rate, the sector will provide little meaningful boost to the economy in the first quarter."
Markets were still jittery after Greece's new government said it will not cooperate with the International Monetary Fund and the European Union and will not seek an extension to its bailout program, underlining fears over a clash with its international creditors.
Meanwhile, sentiment on the dollar remained vulnerable after the Commerce Department said in a report on Friday that the U.S. economy expanded 2.6% in the final three months of 2014, below expectations for a 3.0% gain and slowing sharply from growth of 5.0% in the three months to September.
Sterling was lower against the euro, with EUR/GBP rising 0.25% to 0.7515.
In the euro zone, Markit said that Germany's manufacturing PMI slipped to 50.9 in January from 51.0 the previous month, confounding expectations for the index to remain unchanged.
France's manufacturing PMI ticked down to 49.2 this month from 49.5 in December. Analysts had also expected the index to remain unchanged in January.
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British Manufacturing Activity Strengthens On Output & Orders
The U.K. manufacturing sector started the year on a firmer footing as output and new orders ticked higher following a slowdown seen in the latter half of 2014, data from Markit Economics showed Monday.
The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose to 53 in January from a revised score of 52.7 in December. The score also exceeded the expected level of 52.8.
The index has remained above the neutral 50-mark in each month since April 2013.
"Though the overall index showed a modest increase, it may be enough to allay fears of an overall slowdown in the UK economy as the Eurozone continues to experience problems," David Noble, group chief executive officer at CIPS, said.
The economic growth in the U.K. moderated in the fourth quarter due to weakness in production and construction. GDP grew 0.5 percent sequentially, the slowest in a year. Nonetheless, in 2014 as a whole, the economy logged its strongest growth in seven years.
Manufacturing output expanded for the twenty-third consecutive month underpinned by a further increase in incoming new orders. The domestic market remained the prime driver of improved new order inflows.
There was also a modest rise in new business from overseas, representing the first meaningful improvement in new export order volumes for five months.
The ongoing upturn in the sector encouraged further job creation in January. Staffing levels rose for the twenty-first successive month, but the rate of increase eased to a three-month low.
Data signaled a steep drop in average input costs. The rate of purchase price deflation accelerated sharply to its steepest for over five-and-a-half years.
Lower purchase prices filtered through to average output charges in January, as companies reduced their selling prices for only the second time during the past five years. However, the rate of decline in output charges was only mild and substantially less marked than that signaled for input costs.
The survey results do little to dilute belief that the Bank of England will not only keep interest rates down at 0.5 percent at the February meeting, but will not now be hiking rates until 2016, IHS Global Insight's Chief UK Economist Howard Archer said.
Inflation eased to 0.5 percent in December. The rate was last seen in May 2000 and was also the lowest since records began in 1989.
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U.K. construction PMI rises to 59.1 in January from 57.6
U.K. construction sector activity expanded at a faster rate than expected in January, one month after hitting the lowest level in 17 months, industry data showed on Tuesday.
In a report, market research firm Markit and the Chartered Institute of Purchasing & Supply said that their U.K. construction purchasing managers' index increased to a seasonally adjusted 59.1 last month from a reading of 57.6 in December. Economists had expected the index to dip to 57.0 in January.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Commenting on the report, Tim Moore, senior economist at Markit and author the report, said, “UK construction companies have found their feet again after a protracted slowdown in output growth at the end of 2014."
GBP/USD was trading at 1.5023 from around 1.5000 ahead of the release of the data, while EUR/GBP was at 0.7542 from 0.7549 earlier.
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Pound Edges Higher as Services PMI Cheers
The UK services PMI rose to 57.2 in January, above last month's 55.8, while analysts had expected 56.3, Markit informed on Wednesday.
Cable jumped after the release and was seen trading at $1.5183, 0.13% higher on the day.
Sterling rose more than 150 pips on Tuesday in what was a spectacular rally. The support mainly came from an upbeat construction PMI and Monday's better-than-expected manufacturing PMI, along with the strong bids around the $1.50 area. The short covering of the greenback's long positions and the broad anti dollar mood on Tuesday helped as well.
During the US session, market participants will focus on the ADP employment change, which is expected to soften from last month's 241,000 to 220,000, and the ISM composite index later in the session.
Technical analysis
GBP/USD has stayed in a wider correction phase for the last three weeks after a huge sell off. The currency cross hovers between a $1.5250 high and a $1.4950 range low.
Spikes are replaced by sell offs and as long as sterling stays in this trading range it's very hard to predict future moves, except the rebound from support and retreat from resistance.
One valid trading idea as sterling nears upper band resistance is to sell above $1.52 with stops on $1.53 and a target below $1.50.
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UK house prices jump unexpectedly in January
British house prices spiked unexpectedly last month, recording their biggest monthly increase since May 2014, but mortgage lender Halifax said that it expected a broader slow down in house price rises to persist this year.
Halifax said that house prices rose by 2.0 percent in January, up from a 1.1 percent increase in December and far outstripping the 0.1 percent average increase forecast in a Reuters poll. ECONGB
Prices in the three months to January were 8.5 percent higher than a year earlier, compared with a 7.8 percent annual increase in the three months to December.
"These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market," Halifax housing economist Martin Ellis said.
However, he added that January was also a month when house prices could be particularly volatile due to low volumes, and stuck with a forecast for house price growth to slow over 2015 as a whole.