GBPUSD news - page 99
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Cable Hovers Above $1.30 Ahead of Labor Market Data
Sterling slid during the European session and was falling toward the $1.30 mark, partly erasing yesterday's gains, with the GBP/USD pair spotted trading 0.20% lower, mildly above the $1.30 level.
Later in the day, labor market data from the United Kingdom are due, which might push the pound further higher as it would appear that sterling refuses to go lower.
"Today’s ILO unemployment rate for the three months to June is expected to remain unchanged at 4.9%, given that most of the data also pre-dates Brexit, however the jobless claims number for July may offer some clues as to any potential Brexit shock wave, with expectations of a 7.2k jump in claims, up from a 0.4k rise in June," Michael Hewson, Chief Market Analyst at CMC Markets UK said on Wednesday.
In the previous session, the yearly CPI print unexpectedly improved to 0.6% from 0.5% previously, while the monthly change declined to -0.1% from 0.2% booked in June. In addition, the core gauge decelerated a notch to 1.3% year-on-year. Sterling advanced after these numbers.
UK July Labour Market Holds Firm, Claimant Count Falls 8,600
The UK claimant count data was significantly better than expected with a decline of 8,600 for July after a revised increase of 900 the previous month. This was the first decline since February 2016 and will offer relief over immediate post-referendum trends, although medium-term concerns will continue.
The June unemployment rate held at 4.9%, which was in line with expectations. For the second quarter, there was an increase in employment of 172,000 from the first quarter and gain of 606,000 compared with the previous year. The employment rate at 74.5% was the highest since current record began in 1971.
Overall average earnings increased by 2.4% in the year to June, from 2.3% the previous month and in line with expectations, while the increase excluding bonuses was 2.3%. The overall increase in earnings was at the highest rate since October 2015.
The unemployment data suggests that there was a firm labour-market tone into the June referendum, although there was no significant evidence of upward pressure on earnings growth.
The July claimant count data suggests there was no immediate move by employers to cut employment, although there are inevitably lags involved in the data. A more cautious attitude by employers will tend not to show up in the data for a few months, especially as the evidence has been of companies delaying recruitment rather than cutting jobs. There was a decline in vacancies to the lowest level since October 2015.
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Details of the July 2016 UK retail sales data report 18 August 2016
UK public sector net borrowing July GBP -1.5bln vs -2.2bln exp
UK July PSNBR and PSNCR now out 19 Aug 2016
Better looking data post-Brexit but not meeting expectations in a month traditionally good for revenues.
Work to be done still and fin min Hammond will have less to give away in the Autumn Statement based on this evidence.
ONS says:
"Due to the volatility of the monthly data, the cumulative financial year-to-date borrowing figures provide a better indication of the progress of the public finances than the individual months.
The data presented in this bulletin presents the latest fiscal position of the public sector as at 31 July 2016 and so includes the first post-EU referendum data. However, estimates for the latest period always contain a substantial forecast element and so any post-referendum impact may not become clear for some time."
Full report here
GBP/USD Monthly Fundamental Forecast – August 2016
The GBP/USD saw a small decline for the month of 0.89 after being rocked by the Brexit vote at the end of June. The pair is trading at 1.3228 supported by a weaker US dollar. The pound is down over 15% on an annual basis. The U.K.’s decision to leave the European Union represents a major economic shock to the U.K. and Europe. It will lower business and household confidence in the U.K. and Europe, while also potentially fanning the flames of referendum in other countries given the electoral cycle across the continent. Despite the importance of the shock to Europe.
The economic impact of Brexit will be focused on the U.K. and Europe and should see a reduction in investment and household spending in both areas, with the impact expected to be more pronounced in the U.K. Our U.K. strategist, Alan Clarke, predicts a minor recession for the U.K. late this year, followed by no growth for 2017 (pages 16-17). For Europe, this could not come at a worse time, as economic prospects in many Euro Area countries had been improving and surprising to the upside. European strategist Frederic Prêtet has shaved half a percentage point off his Eurozone growth forecast for 2017, to about 1% The Bank of England has already signaled that it may need to loosen monetary policy in response to the change in the outlook, and we expect a 50 bp cut to their policy rate in August. The ECB is also likely to respond to the additional weakness this month.GBP/USD Weekly Outlook August 22-26
GBP/USD posted a strong recovery in the past week, on the back of a weaker Dollar, stronger UK data, and extreme positioning. The pair has now posted a bullish engulfing candle the weekly chart, setting a bullish tone for the new week.
The US Dollar tumbled in the prior week, with the largest losses printed on Tuesday. Data releases from the United Kingdom on the day came in above expectations, and the combination of favorable circumstances for the currency pair triggered a technical break higher.
UK data throughout the week has been stronger than expected. CPI, PPI, and HPI figures came in above expectations on Tuesday, while labor data mostly exceeded expectations on Thursday. The exchange rate had traded heavy ahead of the week as the Bank of England took action at their last central bank meeting in early August, and signaled the potential for further easing, triggering a trend lower. The data questions whether the bank will take further action at their next meeting.
Between the positive surprise in data out of Great Britain, and the FOMC meeting minutes, a steady rally has shown the pair comfortably above the psychological 1.3000 handle once again.
Wednesday’s FOMC meeting minutes failed to provide clarity as to the Fed’s intention of raising interest rates. Strength in the labor markets and a recovery in the financial markets following the UK vote was acknowledged, while some members expressed further concerns surrounding both topics. The Fed reiterated its data dependent status but also hinted that they may move ahead with tightening if further data allows them to do so. The release triggered a brief drop below the 1.3000 handle, but an appreciation took the pair towards resistance seen at 1.3081. The level reflects strong support in the second half of July, and resistance in the early part of August. Thursday’s UK labor data served to send the exchange rate above the resistance level.
The US Dollar was seen recovering on Friday, following a heavy selloff in the week. The recovery triggered a turn in GBP/USD, sending the exchange rate below the 1.3081 following a technical break from a rising channel seen from early week lows.
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UK CBI industrial trends orders Aug -5 vs -10 exp
UK CBI industrial trends orders report 23 Aug 2016
UK CBI says lower sterling price may helping overseas demand for UK exports. NSS!
The Confederation of British Industry (CBI) Industrial Trends Orders measures the economic expectations of the manufacturing executives in the U.K. It is a leading indicator of business conditions.
A level above zero indicates order volume is expected to increase; a level below zero indicates expectations are for lower volumes. The reading is compiled from a survey of about 550 manufacturers.
UK Mortgage Approvals Fall in July, Business Lending Improves
According to the British Bankers Association (BBA) mortgage approvals declined to 37,700 for July from 40,100 the previous month and weaker than consensus forecasts for a figure around 38,500.
There was a 19% annual decline in approvals and the figure was the lowest since January 2015. Although there was still a net increase for the first seven months of 2016, the underlying trend has been a clear slowdown. While doubts surrounding the housing sector will continue, there will be relief over business lending trends.
Following the EU referendum vote, the housing sector will continue to be an important focus over the next few months, especially given its importance for the economy as a whole. There will be significant lags before any underlying downturn in confidence has an actual impact on the market given the long lead times for decisions. The cut in interest rates will also have only a delayed impact in changing sentiment. The market will also continue to be distorted by changes in tax legislation, which boosted buy-to-let sales early in 2016.
According to the BBA consumer borrowing patterns were little changed in July from the previous month, while business lending strengthened after a significant downturn for June and there has been a generally stronger trend over the first seven months of 2016.
Again, there are significant lags involved with the data and figures will be closely monitored over the next few months, but there will be relief over short-term lending trends and no evidence of supply difficulties, which should support confidence to some extent.
Gilts edged slightly lower after the data, while Sterling moved back above 1.3200 against the dollar, although this primarily reflected short covering rather than a direct data impact. The FTSE index remained in negative territory, but pared losses.
GBP/USD Recovery Met With Trendline Resistance
A strong recovery from lows at 1.2865 now shows GBP/USD reacting from trendline resistance at 1.3250. The 4-hour chart has already shown early indications of a turn as momentum is seen slowing with a doji print. A rising trendline from Monday’s lows provides the first level of support, and a break below the trendline would indicate a broader decline is taking place.
The declining trendline originates from the recovery following the UK vote. The origin point comes from the spike high of 1.3533 on June 29. The trendline will be a pivotal technical indicator for GBP/USD, as a bullish break would suggest that a broader recovery is taking place, with first targets at 1.3474 resistance. The level has been critical for GBP/USD following the EU referendum and has served to cap two prior recovery attempts.
GBP/USD has shown a steady appreciation this week, following a small retracement near the weekly open. The pair is the strongest currency on the week thus far. Significant technical developments are seen across the cross rates with several pairs on track to post an evening star or morning star pattern on the weekly chart, if the Pound Sterling is able to maintain current levels into the end of the week. The technicals are giving early indications that a broader appreciation may be seen in the British Pound over the medium term.
On Thursday, realized sales will be released from the Confederation of British Industry. Out of the United States, core durable goods orders and unemployment claims will be reported. The risk for the pair remains on Friday, as both US and UK GDP figures will be released, as well, Fed chair Janet Yellen willing be giving her speech at the Jackson Hole Symposium.
Near-term support in GBP/USD is seen in a zone between 1.3198-1.3208 reflecting spike highs from Tuesday. The zone carries confluence with a rising trendline from Monday’s lows. Further support is seen at 1.3172, the level served to cap a decline in mid-July and served as resistance on a recovery following the BoE rate cut. Strong support for the week is seen at 1.3081, the level served as support in the second half of July and provided resistance in early August.
GBP/USD: Cable Steps Down From 4-Wk High, Jackson Hole Limits Losses
Sterling was trading lower against the buck on Thursday, as upbeat data from the US pushed cable lower from the eight-week high of $1.3274 booked on August 24.
However, the greenback remained flat against its major peers as the US dollar index was almost stationary at 94.74 points in the afternoon, dwelling above the eight-week low of 94.05 points seen a week ago.
The buck's further upside potential was limited by the waiting mode ahead of the crucial Jackson Hole annual central bank symposium, which may offer more clarity on the Federal Reserve's (Fed) long-term outlook for the US and global economies.
Fed Chair Janet Yellen will speak at the event, following on from some of her colleagues who spoke earlier in the week.
Kansas City Fed president and FOMC voting member Esther George said that it's time to raise interest rates. However, she still favors lower rates and gradual monetary tightening.
In addition, Fed Vice Chairman Stanley Fischer praised the performance of the US economy, with the labor market reaching its full potential, while inflation was on the path to the Fed's 2% target.
In the afternoon, the GBP/USD slipped 0.35% to $1.3185, falling from an intraday high of $1.3263 seen during the Asian market hours.
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