GBPUSD news - page 78
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Morgan Stanley recommends selling GBP/CAD this week Morgan Stanley's trade of the week is to sell GBP/CAD
"We like selling GBPCAD, underlining the tactical nature of this trade. We remain oil-bearish, but cannot ignore market positioning leading to a further oil price squeeze.The direct terms of trade effect of fluctuating oil prices is more significant for CAD compared to GBP. The oil price impact on GBP is of indirect nature, coming via falling dividend payments of its oil sector investment and the investment flows of sovereign wealth funds. Sovereign wealth fund flows into the UK relative to GDP are five times higher than flows into the US. This reduced oil-related net inflow into the UK is long term, while terms of trade effects work immediately. Hence, the oil short-covering rally should work in better support for CAD compared to GBP.
GBP/USD: Sterling Suffers Under Plummeting Oil Prices The free fall in oil prices forced investors to retreat from riskier assets such as sterling, while the market attention is slowly shifting towards the Federal Reserve (Fed) meeting which starts today. UK traders will also focus on Bank of England (BoE) Governor Mark Carney’s testimony on the Financial Stability Report before the Treasury Select Committee in London.
The pound found it difficult to stay above the $1.42 handle, with the retreat in oil prices further below $30 per barrel sending sterling into negative territory on Tuesday, trading 0.42% lower at $1.4187, hovering near its daily lows.
Late on Monday, BoE Monetary Policy Committee (MPC) member Kristin Forbes shared her belief that the recent falls in oil prices allowed the MPC more time to evaluate whether the recent falls in unemployment will eventually lead to a pickup in wage growth, following on from Martin Weale’s comments last week.
Both crude benchmarks dropped below the key $30 level on Tuesday, extending huge losses from the prior session, with the oil market still fragile as oversupply dominates.
"Today Mark Carney is likely to face some tough questioning from MPs on the Treasury Select Committee about his continued shifting of position on the UK economy and the timing of when interest rates might rise," Michael Hewson, chief analyst at CMC Markets, said.
Carney hinted in August last year that interest rates could be set to rise in the coming months only to revise that position at the beginning of this year.
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UK BBA mortgage approvals Dec 43,975 vs 45,500 exp Latest housing sector data now out
The British Bankers' Association (BBA) Mortgage Approvals measures the number of new mortgages approved by BBA-backed banks during the previous month. It includes more than half of the total U.K. mortgage market.
UK Economy Showing More Positive Growth in Q4 The UK's economy was in a slightly stronger position in the fourth quarter growing 0.5%, up from the downwardly revised 0.4% growth in the third quarter, the first estimate of GDP showed on Thursday.
Figures from the Office for National Statistics (ONS) showed output increased in two of the main industrial groups; services and agriculture. In contrast production fell 0.2% and construction dropped 0.1%.
ONS chief economist Joe Grice said: "Growth continues to be driven by the UK's dominant services sector, while the production and construction sectors shrank slightly in the fourth quarter."
Services was again the primary driver within total UK growth. With a significant weight of 78.6%, the sector rose 0.7% on the quarter, and increased 0.2% between October and November, a separate data release showed today.
The largest contribution to growth in this sector came from business services and finance, which contributed to the output with 0.9 percentage points.
The first estimate is composed of less than 50% of the data available at the time of release, and includes only the output side of GDP, so the headline figures are subject to revisions. Expenditure data are included in the second and third estimate.
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GBP/USD: Volume Signals Buyers' Return For the British pound, the new year brought little respite from the heavily bearish picture that continued unabated for much of January, against the backdrop of global equity markets in a temporary swoon as Chinese data continued to disappoint. The trend lower has seen Cable shed over 1000 pips in rapid time, moving from the volume point of control in the 1.5100 region to ultimately trade at a low of 1.4079 on the 6B March futures contract, before finally finding some much needed traction last week. The driver for much of this move has been sterling weakness as opposed to U.S. dollar strength, which itself continues to struggle to break through the 100 region on the dollar index chart. In fact. it has been the continuous stream of weak fundamental news for the pound that has helped drive the pair ever lower in early 2016.
That said, for volume traders, the stopping volume of the January 19 was a clear signal of insider buying, with the narrow-spread price action and ultra-high volume telling its own story -- and the first sign that the bearish trend was reaching a pause point and possible reversal on the daily chart. Indeed the volume of the 19th was the highest in several months and, since then, the pair have re-based around 1.4150, to currently trade higher at 1.4368 at the time of writing, as Thursday morning’s GDP release provided further impetus to the rally higher.
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GBP/USD: Sterling Reverses Course, Crashes 250 Pips From Daily Highs Friday's main story was the fourth quarter US GDP data release, which spurred further dollar strengthening on the pair. The GBP/USD pair dropped from $1.43 to around $1.4265, with the pound continuing to head lower to new daily lows around $1.4160.
According to the first official estimate, the US GDP for the fourth quarter dropped from 2.0% to 0.7%, while analysts had expected only a decline to 0.8%. In addition, the GDP price index decreased to 0.8% from 1.3% previously, while the PCE annualized index worsened from 3.0% to 2.2% and managed to beat the 1.8% estimate, the Bureau of Economic Analysis informed market participants on Friday.
"Weakness in growth was led by inventories and net exports, both of which subtracted 0.5 points from the annualized growth rate. Real domestic final sales rose at a more respectable 1.6% pace. Total real final sales were up at a 1.2% pace," Jim O'Sullivan, chief US economist at High Frequency Economics added more numbers to the release.
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GBP/USD forecast for the week of February 1, 2016 The GBP/USD pair initially broke down during the course the week but turned back around to form a perfect hammer. This hammer suggests that the buyers are going to step back into this marketplace and push this market higher. A break above the top of the candle of course is a buying opportunity, and as a result it’s very likely that the market will rally next. However, we are very cognizant of the fact that we are very much in a downtrend so therefore think that the rally will be short-lived at best.
UK Preview: External Headwinds to Weigh on BoE Fresh Forecasts The Bank of England (BoE) will announce its monetary stance for the month of February next Thursday. It will be accompanied by the minutes from the meeting of the nine-strong Monetary Policy Committee (MPC), and fresh forecasts published within the quarterly Inflation Report. There is absolutely no doubt the central bank will leave policy unchanged, and the base rate will have been sitting at the rock bottom of 0.5% for nearly seven years.
Inflation in the UK remains significantly weak and wage growth retreated in the second half of 2015, which have led most forecasters and economists to push back their expectations for the first hike in the BoE's base rate further into 2016.
Robert Wood of Bank of America Merrill Lynch told WBP Online this week that "the BoE is currently firmly in wait-and-see mode. Softer wage growth, global worries, and weaker economic growth than a year or two ago give the BoE plenty of reasons to wait. Weak inflation gives them plenty of room to wait … We look for the first BoE hike in November. The risks are skewed to delay in our view".
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It still has some way to go.
December 2015 UK mortgage approvals 70.8k vs 69.6k exp Highlights of the December 2015 UK mortgage approvals data report 1 February 2016