GBPUSD news - page 63

[thenews]

GBP/USD falls to fresh 3-month lows, ECB weighs

The pound fell to fresh three-month lows against the U.S. dollar, as the possibility for further easing measures by the European Central Bank weighed on sentiment and as investors were cautious ahead of the U.S. nonfarm payrolls report due later in the day.

GBP/USD hit 1.5214 during European morning trade, the pair's lowest since June 5; the pair subsequently consolidated at 1.5238, slipping 0.13%.

Cable was likely to find support at 1.5188, the low of June 5 and resistance at 1.5314, Thursday's high.

The ECB indicated on Thursday that it could expand its quantitative easing program amid increased downside risks to its inflation outlook.

The ECB lowered its forecast for growth and inflation, citing oil prices and slowing growth in China.

The comments came after the ECB kept its benchmark interest rate at a record-low 0.05%, in line with the consensus expectation.

The pound also remained under pressure after data on Thursday showed that the U.K. Markit services purchasing managers' index fell to 55.6 in August from 57.4 in July. It was the weakest reading since May 2013 and was well below economists’ forecasts of 57.6.

Investors were looking ahead to Friday's highly-anticipated jobs report for further indications on the strength of the economy and signs of a potential rate hike by the Federal Reserve this month.

Data on Thursday showed that the number of individuals filing for initial jobless benefits in the U.S. in the week ending August 29 increased by 12,000 to 282,000 from the previous week’s total of 270,000, compared to expectations for a 5,000 rise.

First-time jobless claims have held below the 300,000-level for 26 consecutive weeks, which is usually associated with a firming labor market.

Sterling was lower against the euro, with EUR/GBP gaining 0.42% to 0.7320.

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[thenews]

GBP/USD forecast for the week of September 7, 2015

The GBP/USD pair fell during the course of the week, slamming into the 1.52 handle. This is an area that has been supportive in the past, so the fact that we held there is indeed interesting. Having said that, we have broken down below a significant uptrend line though, so we feel that the bearish pressure still remains. If we can break down below the bottom of the range for the week, we would be sellers. On the other hand, if we saw some type of resistance closer to the 1.55 handle, we would also be sellers there as well.

[thenews]

GBP/USD Forecast Sep. 7-11

It was another awful week for GBP/USD, which plummeted almost 250 points. The pair closed the week at 1.5164, its lowest weekly close since May. This week’s highlight is Manufacturing Production. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.

In the US, employment numbers were mixed, which only complicates things for the Fed, as it mulls over a rate hike. Much of the pound’s slide last week can be blamed on the PMI reports, as all three PMIs were short of the forecast and Services PMI was well below expectations.

1. BRC Retail Sales Monitor: Monday, 23:01. This indicator measures the change in retail sales in BRC stores, and is a useful gauge of the strength of consumer spending in the UK. The indicator posted a gain of 1.2% in July, weaker than the 1.8% gain we saw a month earlier.
2. Halifax HPI: Tuesday, 8th-10th. This index provides a snapshot of the level of activity in the UK housing sector. The indicator disappointed in July, posting a decline of 0.6%, well short of the forecast of 0.5%. The markets are expecting a strong turnaround in the August report, with an estimate of a 0.5% gain.
3. 30-year Bond Auction: Tuesday, Tentative. The average yield on 30-year bonds came in at 2.73% in the July auction, slightly below the yield of 2.86% in the June auction. Still, this is a higher yield than we saw earlier in 2015.
4. BRC Shop Price Index: Tuesday, 23:01. This index looks at consumer inflation reported from BRC shops. The index continues to post declines, and showed little change in the July report, with an estimate of -1.4%.
5. Manufacturing Production: Wednesday, 8:30. This is a key indicator which should be treated as a market-moving event. The indicator improved in June, posting a modest gain of 0.2%, which matched the forecast. The markets are expecting another gain of 0.2% in the July report.
6. Trade Balance: Wednesday, 8:30. The trade deficit widened in June, coming in at -9.2 billion pounds, very close to the forecast. The markets are expecting a larger deficit in July, with an estimate of -9.5 billion pounds.

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[thenews]

Cable gains accelerate as pound breaks nine-day losing streak

GBP/USD up 118 pips to 1.5287

It would take an epic collapse in the next five hours to extend the nine-day losing streak in cable. The pair is surging today and just broke to a fresh session high.

GBP/USD momentarily touched below the June lows in thin trading on Friday but closed fractionally above and looks to close today above the Friday high in a sign of an extended bounce.

[thenews]

U.K. goods trade deficit widens to £11.1 billion in July

The U.K.’s goods trade deficit widened more than expected in July, official data showed on Wednesday.

In a report, the U.K. Office for National Statistics said the country's goods trade deficit rose to a seasonally adjusted £11.08 billion from a deficit of £8.51billion in June. Economists had expected the goods trade deficit to widen to £9.5 billion in July.

Exports of goods decreased by £2.3 billion to £22.8 billion, the lowest export figure since September 2010. This is attributed to decreases in semi-manufactures, specifically chemicals, of £1.0 billion and finished manufactures of £0.8 billion.

Imports of goods increased by £0.3 billion to £33.9 billion over the same period.

U.K. trade data shows the extent of import and export activity, a key contributor to the overall economic growth of the U.K.

GBP/USD was trading at 1.5366 from around 1.5394 ahead of the announcement, while EUR/GBP was at 0.7275 from 0.7260 earlier.

Meanwhile, European stock markets were broadly higher. London’s FTSE 100 jumped 1.7%, the EURO STOXX 50 rose 2%, France's CAC 40 added 2.1%, while Germany's DAX rallied 1.7%.

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[thenews]

BOE Preview: Market Alert to Signs of Rate Path Delay as 8-1 Vote Expected

Bank of England minutes, due to be released at 1 p.m. CET Thursday, will be under market scrutiny for any hint of delay in liftoff timing due to latest international developments, such as financial turmoil in China and emerging markets, economists say.

No change in monetary policy is expected, while consensus for vote split is 8-1 with Ian McCafferty to maintain call for rate rise again. New monetary policy committee member Gertjan Vlieghe is likely to adopt a low profile at his first meeting.

Here's a round-up of what economists are saying.

JPMorgan

• Global events stemming from emerging markets have shifted risks around call for first BOE rate hike in Q1 2016 to a later move.
• Expect September MPC minutes to sound more caution; with so much uncertainty at present about how recent events will affect growth outlook, unlikely BOE will signal that a different path for policy rate lies ahead.
• Expect McCafferty to maintain his dissent for higher rates for time being.

Morgan Stanley

• Expect BOE to deliver 8-1 vote.
• Moderate risk that McCafferty goes back to being on hold while Haldane, who has long been concerned about global deflation, may vote for cut.
• Expect new member to keep a low profile in his first meeting.
• Sees BOE lifting rates in February.

Goldman Sachs

• Expect MPC to leave policy on hold; minutes and monetary policy summary will probably indicate MPC is taking stock of external risks linked to recent developments in China.
• Significant likelihood that vote for unchanged policy will be unanimous.
• MPC to raise rate by 25 bps in Q2 2016; MPC will only follow and not lead Fed in raising policy rate.

BNP Paribas

• An 8-1 split most likely outcome.
• Little scope for policy change; unlikely any further members will vote for a hike given recent volatility in markets and external downside risks to growth.
• New MPC member Gertjan Vlieghe unlikely to vote against consensus at first meeting.

HSBC

• Expect 8-1 split with Ian McCafferty voting for rate rise.
• While Weale and Forbes may also lean toward tightening, don’t think they’ll join him yet given recent global volatility; hard to believe new member Vlieghe would vote for an increase at his first meeting.
• Revise GBP/USD forecast to 1.58 from previous 1.45 in Q4 2015 and to 1.60 from 1.45 previously in Q1 2016, strategists team incl. David Bloom say in separate client note.
• Revisions made on back of rate expectations, upside risks if investors should ever contemplate BOE moving ahead of Fed, evidence of GBP rising when BOE begins to tighten.
• Risks from Brexit and U.K.’s sizeable economic imbalances remain.

Credit Agricole

• BOE/ECB policy divergence should encourage renewed EUR/GBP selling especially if markets continue to recover from China-induced selloff.
• Current EUR/GBP level offers an attractive selling opportunity.
• Internal short-term fair value model suggests pair is excessively overvalued; fair value seen as low as 0.7150.
• BOE minutes to reveal unchanged voting split with Ian McCafferty still voting for a hike.

Deutsche Bank

• BOE expected to keep policy unchanged; focus will be on whether the one dissenting voice last month continued to vote for a rate rise in aftermath of last month’s market volatility.
• One member could still vote in favor of higher rates if market conditions are stable at time of meeting.

Nomura

• McCafferty to be lone dissenting voice again.
• While there may discussion about China, this isn’t new; every MPC Minutes in past 6 months has discussed China and Mark Carney said at Jackson Hole they’re not enough to blow the MPC off their trajectory.
• Expect a February increase, albeit with risks of a later move, much sooner than market pricing.

Citigroup

• Carney is sticking with the normalization theme and is hardly likely to give the impression that rate rises are on hold indefinitely.
• The near-term risk is that MPC push back again the flatness of the front-end, as they did in April.
• That said, global events dominate and the risk of policy error (like the ECB/Riksbank in 2011) acts as a deterrent.

Barclays

• Recent GBP depreciation likely to be confirmed this week.
• BOE meeting and minutes should reveal an even more cautious monetary policy stance than that in August Inflation Report, given recent Chinese growth concerns and financial market volatility.
• Macro policy mix in U.K. remains tight; MPC remains uncomfortable with persistent GBP strength; market may price even further delays to BOE tightening.

Unicredit

• A dovish BOE poses some short term downside risks to GBP.
• Expect a fairly dovish BOE with at most one member voting in favor of rate hike, which should maintain some downside risks in short term.

Credit Suisse

• BOE meeting likely to be a non-event with unchanged policy; in minutes expect one member to vote for a hike; MPC members are in wait-and-see mode as they look at how domestic conditions and external environment evolve.
• Remain bullish on GBP; any dovish comments from BOE meeting on China or PMIs a risk.

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[thenews]

BOE minutes show rate vote split at 8-1

Minutes from the Bank of England's most recent policy meeting released Thursday showed that the Monetary Policy Committee voted 8-1 to keep rates on hold.

The minutes showed eight members were in favor of leaving the key interest rate at a record low of 0.5%, in line with expectations and unchanged from the previous meeting.

Dissenting member Ian McCafferty voted for a 0.25% hike in the benchmark rate to 0.75% for the second consecutive month.

All nine members were in favor of making no changes to the central bank's £375 billion asset-purchase program.

According to the minutes, the U.K. economy’s prospects remain positive and recent market turmoil related to China’s slowdown hasn’t shaken the bank's view that the time for a rate increase is approaching.

“Global developments do not as yet appear sufficient to alter materially the central outlook described” in the August Inflation Report, the minutes said.

Most market players expect the BOE to begin slowly raising interest rates in mid-2016.

GBP/USD was trading at 1.5442 from around 1.5386 ahead of the announcement, while EUR/GBP was at 0.7246 from 0.7273 earlier.

Meanwhile, European stock markets were lower. London’s FTSE 100 shed 0.8%, the EURO STOXX 50 slumped 0.85%, France's CAC 40 declined 0.7%, while Germany's DAX lost 0.45%.

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[thenews]

GBP/USD: Sterling Edges Higher on Neutral BoE Minutes

The Bank of England (BoE) made no changes to monetary policy at its September meeting, therefore the main refi rate stayed at 0.5% and the QE amount remained at £375 billion.

The minutes from this meeting revealed that still only one Monetary Policy Committee (MPC) member (Ian McCafferty) voted in favor of a rate hike and the remaining eight members wanted rates to stay at the current levels.

Consequently, for eight members, "the current policy stance remained appropriate" although "uncertainty about the near-term path of inflation had increased, but a pickup around the turn of the year remained likely."

Sterling edged higher after the release to $1.5444, 0.51% higher on the day. The reaction was bullish and traders seem to ignore for now that the BoE is in no hurry to raise rates.

On Wednesday, negative UK data sent the pound lower, but it managed to recover pretty quickly. Manufacturing production for July dropped from 0.2% to -0.8% month-on-month and the yearly change printed -0.5%, well down from 0.5% previously. Industrial production for July remained at -0.4%, while year-on-year it decreased from 1.5% to 0.8%.

Moreover, the trade balance posted a bigger deficit of £3,371 million, which declined from -£1,601 million in June, the Office for National Statistics advised.

"The tweezer bottom at 1.5170 and bullish engulfing day seen this week has the potential to see a sterling move through 1.5430 towards 1.5520. Yesterday’s pullback has thus far held above support at the 1.5330 area. A move below 1.5170 argues for a test of the May lows at 1.5080," Michael Hewson, chief market analyst at CMC Markets UK, said on Thursday.

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[thenews]

BOE's Forbes says UK interest rates likely to rise sooner rather than later

Don't panic. These are comments to Welsh media after her speech in Cardiff earlier

• Rate rises will depend on evolution of the economy

[thenews]

GBP/USD forecast for the week of September 14, 2015

The GBP/USD pair bounced off of the 1.52 level during the course of the weekend then continue to go much higher. The 1.55 level above has been resistive during the week, and as a result we are now looking to see whether or not we are going to test this area and fall, or continue to go higher. The fact that we broke down below the uptrend line on the chart suggests that we should see selling overall, but at this point in time we believe that shorter-term charts such as the daily timeframe will be needed in order to discern whether we are pulling back, or breaking back out to the upside and aiming for the 1.58 handle.

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