GBPUSD news - page 58
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GBP: Rate Outlook Supportive But We Stay Short Cable - Credit Agricole
The GBP has benefitted from BoE Governor Carney’s more hawkish rhetoric, and this week’s data may well support the case for further improving growth prospects.
In line with BRC sales data, strengthening retail spending this week should add to the already encouraging UK consumer outlook. Indeed, with consumer confidence rising to a three-year high, spending data appears likely to rise faster through the summerholiday season.
However, around the current levels it will be difficult for centralbank rate expectations to rise further. This is especially true as the market is pricing in two hikes for the coming 12 months. If anything, that should be in line with a gradual tightening of monetary policy.
Elsewhere, falling safe-haven demand may lead to a weakening capital flow situation. We note BoE Gilt purchases data showing foreign inflows rising to GBP77bn year-to-date. Any reversal of such flows may increase GBP downside risks up ahead.
We stay short GBP/USD.
CA maintains a short GBP/USD position targeting 1.4850, with a stop at 1.5850.
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June 2015 UK PSNB 8.584bn vs 8.600bn exp
UK public sector finances for June 2015
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Bank of England MPC votes 9-0 to keep rates unchanged
Highlights of the minutes from the July 2015 Bank of England monetary policy meeting 22 July 2015
GBP/USD: Sterling Remains Elevated Ahead of EU Open
Sterling remained elevated on Thursday as the Bank of England (BoE) seems to be moving closer to the point at which it will begin to normalize UK monetary policy after more than six years of an ultra-loose stance.
While the BoE’s Monetary Policy Committee (MPC) minutes showed a unanimous 9-0 vote, a number of members are edging towards voting for a rate hike, but stayed put for now due to the global risk aversion caused by Greece.
Sterling added light gains on Thursday ahead of the European open, trading 0.14% higher to $1.5631.
The bank minutes revealed that for the members who were considering voting for a rate hike, "the uncertainty caused by recent developments in Greece was a very material factor in their decisions: absent that uncertainty, the decision between holding bank rate at its current level versus a small increase was becoming more finely balanced." As such, absent any further Greek (or other) shenanigans, the August meeting is likely to result in a split vote on the MPC, with potentially up to three members voting for rate hikes.
UK traders will also focus on retail sales numbers for June, which are expected to show that consumer’s shopping habits are still holding up well, but not running away despite the sharp increases in wages seen in the last couple of months.
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une 2015 UK retail sales -0.2% vs +0.3% exp m/m
June 2015 UK retail sales data report 23 July 2015
Worse than expected but somewhat shadowed by better revisions. The Q2 numbers are also out and they show the weakest spending growth since Q1 2013 y/y and the lowest since Q3 2014 q/q
GBPUSD has been kicked back through 1.5600 to 1.5588. I'm going to look to have a little buy here as retail sales can be choppy at the best of times and this data goes against the current dollar weakness trend today
There's a lot being made about the drop in quarterly sales values but that's obvious given the lower input prices and inflation, and doesn't necessarily mean people are buying less. Year on year sales are still relatively good.
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Bullish GBP But Risk-Reward Not Attractive To Long In Spot - BNPP
BOE officials have been sounding more hawkish as of late and the rate markets have responded by bringing forward the pricing for the start of the BOE rate hike cycle, notes BNP Paribas.
"We are broadly bullish on the GBP, with an earlier BOE tightening likely to provide support. However, the BOE is sensitive to the impact of policy changes on the exchange rate, creating a feedback loop from currencies to rates, which should limit the extent to which the GBP can appreciate in H2," BNPP projects.
"Moreover, with the GBP having already outperformed most major currencies this year and in July, the risk-reward for entering new GBP long cash positions is not attractive. Significantly, markets are unlikely to return to where they were last year, pricing the BOE to begin hiking even before the Fed," BNPP warns.
"We therefore turn to the FX correlation markets to explore attractive opportunities to position for GBP strength," BNPP advises.
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GBP/USD forecast for the week of July 27, 2015
The GBP/USD pair initially tried to rally during the course of the week, but turned back around to fall to the 1.55 handle. However, we recognize that there is an uptrend line that could support this market, and the Friday candle was a hammer. With that, the market looks like it could bounce and head towards the 1.58 handle. We have notched in selling this market right now, because 2 weeks ago we saw a massive hammer. We believe that it’s only a matter of time before we continue higher, so at this point in time we have significant pressure to the upside.
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GBP/USD weekly outlook: July 27 - 31
The pound erased early losses to end little changed against the dollar on Friday after unexpectedly weak U.S. housing data, but expectations for higher interest rates continued to underpin demand for the greenback.
GBP/USD was at 1.5519 late Friday, almost unchanged for the day and up from session lows of 1.5467.
The dollar eased after data showing that U.S. new home sales fell to a seven-month low in June, but another report showed that manufacturing activity edged higher this month.
The Commerce Department reported that sales of new homes fell 6.8% last month, to an annual rate of 482,000 units, the lowest level since November.
May's figure was revised down to 517,000 units from the previously reported 546,000 units.
A separate report showed that the Markit manufacturing index ticked up to 53.8 this month from 53.6 in June, which was the slowest pace since October 2013.
The mixed data came as investors were turning their attention to the upcoming Federal Reserve policy announcement on Wednesday amid ongoing speculation over the timing of an initial interest rate hike.
On Friday, the Fed mistakenly published a staff projection pointing to a quarter point rate hike later this year.
The dollar has been boosted by expectations that the U.S. central bank could raise rates as soon as September if the economy continues to improve as expected.
Sterling was also steady against the euro, with EUR/GBP at 0.7076 in late trade.
The single currency remained supported as talks between Greece and its international creditors on a new bailout package were delayed until Monday.
Talks had been expected to start on Friday but were delayed by logistical issues, including security matters.
A new agreement must be reached before August 20 when Greece must repay more than €3 billion to the European Central Bank.
In the week ahead, investors will be focusing on Wednesday’s monetary policy announcement by the Federal Reserve. Meanwhile, both the U.S. and the U.K. are to release what will be closely watched initial estimates on second quarter growth.
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Preview: UK Q2 GDP preliminary reading today at 08.30 GMT
The data highlight of the morning brings us the preliminary reading for the UK 's Q2 GDP
The final qq Q1 release came in at +0.4% with yy at 2.9% which Ryan covered here, and today's forecasts predict an increase in qq to +0.7% but slower yy at 2.6%
The key services sector dragged down the Q1 reading with a sluggish start in January despite a more positive tone in Feb and March.
So what do we think of today's release? Well recent data has been unconvincing, especially on the mftg output front, but BOE gov Carney and the MPC seem to think there's enough to be cheery about on the wages front to start talking rate hikes at the turn of the year
I'm not yet convinced that there are enough reasons to be cheerful, or indeed it being wise to jack up rates anytime soon but the BOE and Fed seem to have itchy trigger syndrome, if only to try and justify their longer term forecasts that have yet to materialize
First GDP readings always lend themselves to further revisions so today's data should be taken at face value, but suffice to say this market is hungry for a feed at the trough and rationalization will give way initially to knee-jerk reaction
For what it's worth I say the +0.7% qq estimate is largely factored in so I remain a rally seller should we get something better. Don't be surprised if we get an initial figure softer than expected with upward revisions in due course. Anything in the median range of +0.6% to +0.8% should have limited impact.
GBPUSD currently 1.5545 on a slide lower as I type. Offers/res seen between 1.5580-1.5600 with support 1.5485-1.5500
EURGBP currently 0.7112 holding on to 0.7100 support/bids so far this morning. More support/bids below at 0.7080 and 0.7060-65 with offers into 0.7130 and 0.7150
As always though, try not to pre-empt too hard. You don't need crystal balls, just the ability to gauge the price action after the event. Unless coin-flips are your main trading tool, that and inspired guess work
Either way there should be good opportunity for bulls and bears alike.
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Q2 2015 UK GDP prelim 0.7% vs 0.7% exp q/q
Q2 2015 UK GDP preliminary data report 28 July 2015
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