GBPUSD news - page 105
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Sterling index at lowest since Jan 2009 as Brexit woes persist
Sterling's trade-weighted index fell to its lowest since early 2009 on Monday, extending hefty losses seen last week, as deepening worries about an adverse impact on the UK economy from a likely exit from the European Union weighed.
The currency was slightly calmer than Friday when a "flash-crash" wiped out a tenth of its value in a matter of minutes in Asian trade, but sentiment towards the pound remained gloomy with speculators adding to bets against it in recent weeks.
Sterling index fell to 74.2 its lowest since Jan 2009 and down 0.7 percent on the day. The index has lost over 9 percent since the referendum results on June 24 where Britons voted to leave the EU.
Sterling was down 0.4 percent at $1.2380 while the euro was up 0.2 percent at 90.255 pence. Against the dollar, sterling hit a low of $1.1491 on Friday, its lowest since 1985.
GBPUSD falls through 1.2300 as pound pressure continues
Soggy start to the day for the pound 11 Oct
1.2300 now breached and triggering stops down to 1.2285 lows as EURGBP rises to 0.9055
I recommended rally sells again yesterday and noticed immediate res/supply into 1.2450 which held to test and breach the 1.2350 support line. We've not been back through since.
Immediate demand around here then 1.2250 and 1.2230. Larger buy interest at 1.2200.
After Friday's still unexplained fall in Asia this feel like death by a thousand cuts for the pound and seems destined to eventually find those lows that vary anywhere between 1.1500-1.1800
Overall the pound remains under pressure with the TWI ( Trade Weighted Index) down to near-8 year lows of 74.0
source
GBP/USD still gaining, 150+ points from overnight lows
Cable has had a big move in this thin-liquidity time of the 24 hour day
BoE Cunliffe: Underlying Sterling Trend Still Down
In testimony to the House of Lords, Bank of England Deputy Governor Cunliffe stated that the underlying trend for Sterling is still down, although he declined to comment on whether the market is correct on the UK currency. His overall commentary will tend to reinforce negative Sterling sentiment.
He stated that there was still a high degree of uncertainty about the extent to which financial firms will leave the UK and uncertainty about future trade. He also warned that there could be a £20bn hit if the UK loses the EU financial passport.
Cunliffe commented that the November Bank of England forecasts will take account of the decline in Sterling. He was reluctant to make any significant comments on the outlook given that the bank will be making fresh forecasts in November.
Reticence from officials will be a significant element in the short term with the Bank of England meeting due on November 3rd. It will, however, be dangerous for markets to trade in a vacuum and the underlying tone of uncertainty from officials such as Cunliffe is unlikely to support market confidence, especially with a high degree of political uncertainty.
There will be pressure for Bank of England officials to look to stabilise conditions if there is further heavy Sterling pressure and very high volatility within the gilts market. Overall volatility across UK asset prices is likely to remain extremely high in the short term.
BOE report shows unsecured credit to UK households rose in Q3
Bank of England Credit Conditions Survey now published 14 Oct
Levels of UK household debt have always been part of my bearish GBP view and an even stronger part of my argument as to why the BOE could not afford to hike interest rates.
Says the BOE report:
Supply
Demand
-
Lenders reported that demand for secured lending for house purchase fell significantly in 2016 Q3. Within this, both demand
for prime and buy-to-let lending decreased significantly, and the latter recorded the largest fall since the Credit Conditions
Survey began in 2007 Q2.
- Lenders expected overall demand, and demand for prime and buy-to-let, to increase in Q4.
- Demand for other unsecured lending products was reported to have increased slightly in the three months to mid-September,
after four consecutive quarters of significant increases.
- Demand for credit card lending was also reported to have increased
in Q3.
• Lenders reported that overall demand for corporate lending from small, medium and large businesses decreased significantly in
the three months to mid-September
- Demand for lending from small and medium-sized businesses was expected to
be unchanged and continue to decrease, respectively, in Q4. Demand from large business was expected rise slightly in Q4.
Full BOE 13-page report hereGBP/USD forecast for the week of October 17, 2016
The GBP/USD pair fell during the course of the week, reaching towards the 1.20 level below. This is an area that I think will be rather supportive, but keep in mind that eventually we will have a bit of a bounce more than likely, but I think it is also going to be very volatile. Given enough time, I think that we do break down and go even lower. The British pound is still being punished for the exit vote, but having said that it’s not always going to be easy.
GBP/USD Weekly Forecast October 17-21
Pound Sterling gave up 2% against the Greenback in the past week. The Euro and British Pound topped the decliner’s list, posting losses against all of their counterparts.
The pair caught a bounce mid-week as there was some uncertainty as to the parliament’s role in triggering Article Fifty, with Theresa May taking a firm stance, stating that Brexit proceedings would be initiated by the government. Continued Brexit uncertainties will tend to influence the pair, but with a break higher in the Dollar, the pair remains at risk for further declines in the upcoming week.
The US Dollar index (DXY) broke to fresh seven-month highs and managed to close the week out near highs. The index made a strong push higher throughout the week, with a small pullback on Thursday. With markets remaining optimistic over a December rate hike, the Dollar will tend to remain firm, with dips in the index likely bought.
The Federal Reserve released minutes from the September meeting on Wednesday. The minutes revealed that the central bank is generally content with progress in the labor markets, but some concerns were expressed over inflation. With the PCE price index still not at the 2% target, there were cases made for and against a rate hike. While the minutes did not change the market stance on a rate increase in December, it may affect longer-term views on the path of normalization.
The futures market ended the week pricing in a probability of 69.5% for a move in December, relatively unchanged from the prior week.
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UK - Rightmove House Prices (October): 0.9% m/m (prior +0.7%)
UK Rightmove House Prices for October
Pound spikes in Asia but what will Europe make of it?
We've seen a decent rally for the pound in Asian trading 18 Oct
Nothing too exciting to explain the moves that I am seeing or hearing.
Common consensus seems to be a series of stop loss buy orders being triggered in the usual thin Asian liquidity through 1.2200 then 1.2220 and 1.2265, all good areas of resistance in recent days/sessions.
The pair came to a halt at 1.2274 running out of steam into more offers between 1.2285-1.2300 as per yesterday's order board.
EURGBP also came to a grinding halt between 0.8980-85 again and that's proving to be a strong level.
With UK Sept inflation data coming out at 08.30 GMT I expect European desks to approach GBP with caution. The weaker pound is expected to drive up inflation but that doesn't kick in straight away. By now though we should be seeing some impact but the correlation remains a double-edged sword.
Currently 1.2228 cable appears to have some bids at 1.2220 understandably and more into 1.2200 so for now I would expect those areas to hold although we can't rule out a test of 1.2180-85 at some point. Topside we should see 1.2300 contain further rallies for the moment.
EURGBP has found a good base into 0.8980 and I'd expect 0.9030-35 then 0.9050-55 as topside cap for now.
Should be an interesting day with opportunity for both bulls and bears.
source
September UK CPI Hits 22-Month High of 1.0%
There was an increase in UK consumer prices of 0.2% for September, which pushed the year-on-year rate to 1.0% from 0.6%. This was the highest annual increase since November 2014 and also slightly above the expected rate of 0.9%. Given Sterling depreciation and important base effects, the rate will continue to increase steadily and possibly sharply over the next few months.
The core annual inflation rate also increased to the highest level for two years at 1.5% from 1.3% and was also above the expected rate of 1.4%. There was an increase in the RPI inflation rate to 2.0% from 1.8%.
There was upward pressure on prices on a monthly basis from clothing, overnight hotel stays and fuel. There was, however, a monthly decline in prices for air fares and food.
Food prices will be an important short-term focus with the decline in Sterling likely to have a significant impact in raising prices as currency weakness gradually feeds through into retail prices.
There will also be further upward pressure on fuel prices, especially if oil prices maintain a firm tone.
Producer price inflation was subdued, which should have an impact in curbing consumer price increases.
Monthly prices increases were very limited in the final quarter of 2015 and fell sharply in January 2016 as energy prices declined. This base effect will continue to have an important impact in pushing the year-on-year rate higher even if actual price increases are still relatively subdued in the short term.
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