GBPUSD news - page 106
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Best UK Inflation As Pound Sterling Weakness Vs Euro, US Dollar Exchange Rates Impacts Economy
Last week’s Pound Euro, Pound US Dollar exchange rate downtrend looks set to continue, but can UK data help GBP bounce back?
Foreign exchange investors find the British pound holding daily best levels today after news broke that the UK Inflation had bettered market forecasts.
Inflation soared to the best level seen in nearly two years, with petrol prices and clothing costs to blame.
The GBP/USD exchange rate may struggle to hold onto its recent gains on Tuesday afternoon, with expectations for the US Consumer Price Index to have strengthened on the year.
This could increase market expectations for an imminent interest rate hike from the Federal Reserve, although it seems unlikely that markets will price in much greater odds of a December rate move at this juncture.
According to some reports, the Pound Euro (GBP EUR) exchange rate fell below 1.10 briefly on Monday as another week started in a negative fashion.
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September 2016 UK claimant count 0.7k vs 3.0k exp
Details of the September 2016 UK labour market and claimant count data report 19 October 2016
September 2016 UK retail sales 0.0% vs 0.4% exp m/m
Details of the September 2016 UK retail sales data report 20 October 2016
GBP/USD Remains Rangebound Below Notable Resistance
GBP/USD has traded within a narrowing range this week despite some broad-based strength in the Greenback that has triggered weekly range breaks in several major currency pairs. The pair consolidated below an important resistance level on Tuesday and Wednesday and is seen falling to the lower bound of the range, where a rising trendline has been holding the pair higher.
Resistance at 1.2312 reflects support in the initial stages of the decline proceeding the flash crash. The level has held the pair lower in the early part of last week, despite a morning star reversal pattern setting a bullish tone on a 4-hour chart. The level once again held the pair lower this week and remains pivotal for a near-term directional bias. With the pair consolidating within a narrowing pattern, a breakout appears imminent.
Last week’s COT report indicated a large position squaring with the report reflecting data following the flash crash. The crash had triggered stops as well as encouraged profit taking. This week’s data will be important in gauging market sentiment following the crash. A likely scenario would be that buyer may be reluctant to establish long positions as the flash crash has magnified unfavorable risk conditions. It will be important to note if sellers reappear. There may be a view that the current levels are not favorable to sell into after a sharp decline has already materialized. A further increase in short contracts in tomorrow’s report would encourage bears.
September 2016 UK PSNB 10.118bn vs 8.200bn exp m/m
Details from the September 2016 UK public sector finances report 21 October 2016
September UK Public Sector Borrowing Records Annual Increase
The latest UK government borrowing data recorded an increase in net borrowing, excluding public-sector banks, to £10.6bn for September from £9.3bn in September 2015 and the highest September requirement for two years. The data will increase concerns over the long-term budget position.
For the first six months of 2016/17, the borrowing requirement still declined to £45.5bn from £47.7bn the previous year, but the underlying trends will cause concerns.
Net debt increased over the year, although the debt/GDP ratio declined to 83.3% from 84.3% in September 2015.
In the year to date, overall receipts increased 3.9% over the year with an increase in income tax receipts of 2.7%, while corporate tax receipts held firm with a 3.5% annual gain. Central government spending increased 1.7% from the previous year.
For September alone, receipts increased 2.6% on the previous year, while there was a small net decline in income-tax receipts for the month. There was also a 7.8% decline in corporate tax revenue for the month. On the spending side, there was a 4.3% annual increase with a strong increase in dent-interest payments.
The monthly data will inevitably be erratic, but the monthly deterioration in government finances will increase speculation that there will be sustained medium-term depreciation in the budget position.
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Cable runs stops on break of 1.22
Cable hits four-day low of 1.2180
The 30-pip quick drop at a time of day when liquidity is highest underscores the negativity around the currency. On Tuesday, better CPI had led to a rally from 1.2176 but those gains have been completely erased and the pair is now negative for the week.
Monday's intraday low of 1.2127 is support.
The headlines at the moment are from May and she's not backing down but warning that Britain may face some difficult moments as it leaves but will continue to argue for free trade.
GBP/USD forecast for the week of October 24, 2016
The GBP/USD pair went back and forth during the course the week, and ended up forming a less than impressive candle. If we break above the top of the range during the course of the week, it’s very likely that we continue to go higher, but I still think that the 1.2850 level is a bit of a ceiling. Because of this, it’s likely that the market will continue to be negative overall. With this, I feel much more comfortable shorting on signs of exhaustion or break down below the 1.20 level which should be massively supportive.
GBP/USD Weekly Forecast October 24-28
GBP/USD posted a small gain this past week as volatility continued to slow for a second consecutive week following the flash crash earlier this month. The exchanged rate remained in a narrowing range for the bulk of the week with a bearish break at the end of the week. While the pair has shown some signs of a continuation lower, the technical outlook for the Pound cross rates and the latest COT report paints a neutral picture for the currency following heavy earlier losses.
Inflation data out of the United States and the United Kingdom provided little volatility to GBP/USD this past week. UK consumer prices rose 0.2% in September and 1.0% on annual basis. There was some expectation for an increase in inflation related data after the strong push lower in the exchange rate since the EU referendum. Out of the United States, CPI rose 0.3% in September and 1.5% on annual basis. The core figures came in softer, falling slightly short of expectations. The unemployment rate out of Great Britain was reported unchanged and in line with expectations at 4.9%.
The ECB meeting on Thursday triggered initial volatility followed by a turn lower in the Euro and a weekly range break higher in the Dollar as a result. The impact of the reversal was seen across the majors but failed to trigger an immediate bearish break in GBP/USD.
The COT data this week carries additional importance as it shed further light to Sterling positioning following the flash crash. Last week’s data indicated a large position squaring. For the week to October 18, non-commercials were seen decreasing the net short position by $198 million bringing the net short to $7 billion. There was a build in long contracts and a small draw in short contracts with the open interest remaining relatively unchanged on a week over week basis. The data indicates a lack of urgency in rebuilding short positions suggesting Sterling bears may be looking for more attractive levels prior to repositioning.
UK GDP Estimate Upgrades See British Pound Firmer vs Euro and Dollar
Analyst upgrades to estimates for Thursday's GDP reading and falling expectations for a November Bank of England rate cut are supporting Pound Sterling's nascent recovery.
GBP is looking buoyant against the EUR and USD on Monday as growth expectations for the UK economy are revised higher.
Official growth figures for the third quarter are due on Thursday but we have today seen consensus expectations amongst economists raised with the GDP readings expected to come in at 0.3% to 0.4%.
“These estimates also allowed the Pound to maintain, if not extend, its rebound against the Dollar and the Euro, sitting just under $1.225 and €1.125 respectively,” says Connor Campbell at Spreadex in London.
Consensus forecasts shows that annual growth expectations for 2017 have moved gradually up to 0.9%, with a 0.7pp standard deviation.
Barclays are one of the big names who have revised higher their economic growth forecasts lately.
The bank has looked at soft and hard data up to September and conclude that growth will mostly likely average 0.2% q/q in Q3, 0.2pp higher than their previous forecast.
Accordingly, their 2016 and 2017 growth forecasts move up by 0.1pp to 1.8% and 0.1%, respectively.
“Against this backdrop, we now expect the BoE to maintain rates at 0.25% in November and cut in February 2017 to 5bp. We also expect the MPC to confirm QE as it stands but we do not anticipate any insights into whether the MPC would support extending sovereign QE beyond March 2017,” say Barclays in a client briefing.
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