GBPUSD news - page 94
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GBP/USD forecast for the week of July 4, 2016
The GBP/USD pair fell slightly during the course of the week, as we continued the bearish pressure. With this, I believe that this market will continue to go lower over the longer term, but we may need to see a short-term bounce in order to start selling again as it would help with momentum in this market. Even if we break above the top of the candle for the week, it’s very likely that sellers will return somewhere above as there are a lot of concerns with the United Kingdom right now.
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Sterling Trims Gains After Construction PMI
According to the latest release, the UK construction PMI for June crashed to 46.0 from 51.2 scored in May.
The pound gave away earlier gains after the number, trading 0.08% to $1.3253.
The bearish trend is still intact and all rallies should be sold, as the Bank of England might be ready to cut rates in the summer and the post-Brexit costs will hit the pound hard.
"Bank of England Governor Mark Carney was quick to reassure markets that the central bank remained ready to act to keep markets stable, and help ease economic and credit conditions it is hard to believe that the decline in the pound as well as UK government bond yields won't elicit a response from central banks elsewhere around the world," Michael Hewson, chief market analyst at CMC Markets UK said on Monday.
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Pound traders are likely to be nervous ahead of the UK services PMI
Following the collapse of the construction PMI there's going to be some nervousness around the services PMI
GBP longs beware! Yesterday's construction PMI was a very loud warning bell for Brexit related economic fallout. My first thought was that it was a big overreaction, considering that 80% of the survey was conducted before the result was known. However, if that's how firms were reacting before the vote, there's a very big chance that things won't improve now the result is known.
We've had other stories since then that have reminded traders that there's a long way to go before we know exactly how this mess will unravel. Eamonn reported business confidence dropping and a UK fund putting the block on clients liquidating holdings in its property fund. As we've explained many times, Brexit isn't a single data point that's forgotten about after 5 minutes. We face months of uncertainty that's going to play out in all corners of the country and economy. Sometimes traders can suffer from goldfish memory and think that the worst is over just because the pound bounced. The negativity is going to last and that's going to keep the heavy bias on the pound for a long time.
At 8.30 GMT we get probably the biggest indicator for the UK, the services PMI. Services makes up the biggest chunk of the economy and thus GDP. Yesterday's construction PMI is going to have traders thinking we could see the same collapse today. It's definitely a risk that can't be ignored.
Last month we saw it jump (53.5) well above expectations (52.5) and well above the month before (52.3). This month some softness is expected and a drop to 52.8. Although we can't use the construction number as a nailed on guide, we should factor in a far worse number. If we drop but hold in expansion then maybe the reaction in the pound won't be as severe. If we drop into contraction then the pound is going to get hit hard. If there's a surprise and we print a higher number that could catch the market off guard and 1.33 will come back into focus.
Keep an eye on the price action as London opens up and digests the overnight news, and then in the minutes leading up to the release. If we see some choppy moves it doesn't mean the numbers been leaked but that traders are reducing risk into the number.
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Sterling Hits Fresh 31Y Low
According to the latest release, the UK services PMI for June slowed to 52.3 points from 53.5 booked in May. Analysts had expected a decline to 52.8 points.
Following the news, the pound remained under selling pressure, dropping to fresh lows since 1985 and trading around $1.13150.
In the previous session, the construction PMI for June unexpectedly crashed to a seven-year-low of 46.0 points, but sterling did not decline after the number. Friday's manufacturing PMI for June improved to 52.1 points from 50.1 previously.
Furthermore, the semi-annual Bank of England financial stability report is due later in the day, along with a speech by the bank's governor, Mark Carney.
"Here Mr Carney is expected to outline in further detail some of the measures he announced last week with a boost to the funding for lending scheme to make sure banks don’t tighten up credit conditions too much," Michael Hewson, chief market analyst at CMC Markets UK, said on Tuesday.GBP update (sry, that should read downdate)
GBP has continued its slide, but a bit of a bounce from the brief sub-1.2800 low its seen
May 2016 UK industrial production -0.5% vs -1.0% exp m/m
Details of the May 2016 UK industrial production and manufacturing output data report 7 July 2016
Better than expected on all fronts. Decent revisions too. 3m/3m industrial output was the highest since May 201 at 1.9%. 3m/3m manufacturing was at the highest since Apr 2014 at 1.3%.
The ONS say that IP would have to drop by over 6% to flatten Q2. Kiss of death or what!
It's possible that we may see some Brexit related weakness in June's data but so far it looks a half decent quarter in this sector.
The data has cable knocking at the 1.30 door once again but it remains firmly closed.
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UK Trade Deficit Worsens in May
The trade deficit in the UK deepened in the fifth month of the year, posting yet another month in the red, the latest official report from the UK's Office for National Statistics (ONS) revealed on Friday.
The country's exports were £2.26 billion lower than its imports in May, booking a fresh downside trend in the month preceding the Brexit referendum.
Furthermore, the UK's trade deficit with non-EU countries stretched to £2.560 billion in May, also remaining deeply in negative over the reported month.
The country's trade balance is an important macro economic indicator, with a strong currency supporting imports, while a weak national currency helps exports.
GBP/USD: Sterling Fails to Reach $1.30 Again
The GBP/USD pair erased earlier gains and was seen dropping again in the London session, with sterling trading at around $1.2902 after having printed daily highs at $1.2980 and lows at $1.2874.
There are no major data on the agenda today and investors will pay attention to the US labor market conditions index for June. Moreover, two Federal Reserve speakers will be active today - Ester George and Dennis Lockhart, but both are non-voters.
On Tuesday, Bank of England (BoE) Governor Mark Carney along with other FPC members speak at a hearing of the Treasury Committee in Parliament.
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GBP/USD: Sterling Firms Ahead of Carney Speech
Sterling capitalized on the risk-on sentiment and broader US dollar weakness and managed to jump above the $1.30 level, with the pair trading around $1.3080 ahead of the London open, 0.8% stronger on the day.
Later in the day, Bank of England (BoE) Governor Mark Carney along with other FPC members will speak at a hearing of the Treasury Committee in Parliament in London. This is the only major market mover for the pound on Tuesday.
The BoE is due to meet on Thursday and the market anticipates a 25bps rate cut to 0.25%, but the Bank might announce further measures to help the economy, with rumors about a new wave of QE worth £100 billion.
"Despite the recoveries being seen in share prices pressure points still remain in the UK economy, namely in the commercial property and house building sectors, while the banks also remain vulnerable given the flattening of the UK yield curve in the last two weeks," Michael Hewson, chief market analyst at CMC Markets UK, said on Tuesday.
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