GBPUSD news - page 64
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GBP/USD: Pound Switches to Recovery Mode as Dollar Bulls Retreat
The UK currency rebounded against the US dollar and reached the highest level in two weeks as the US dollar bulls failed to regain strength due to the decreasing odds for a September rate hike by the Federal Reserve.
Sterling's rising tendency could be observed from the beginning of the week, as investors continued to liquidate long USD positions, believing that Chinese growth concerns will keep the Fed's finger off the trigger during the upcoming monetary policy meeting.
Over the whole week, the UK currency was in recovery mode against the US dollar following a nine-day losing streak ending September 4.
On Thursday, the Bank of England held its monetary policy meeting but policymakers decided to keep rates on hold for yet another month.
The Monetary Policy Committee (MPC) voted 8-1 to keep rates intact and pointed out that risks to the UK economy were "more to the downside" in September than August.
The sole dissenter was Ian McCafferty, who voted for a 0.25% rise in the base rate once again, convinced that an earlier rate hike "would facilitate a more gradual path for policy tightening".
The MPC also noted that it was "too early" to judge the full impact of the recent stock market turmoil in China, and its potential impact on the UK economy.
Policymakers gave repeated assurances that when the rate hike occurs, subsequent monetary tightening will be modest and that rates will likely remain at historically low levels for many years to come.
The majority of economists expect the central bank's rate-setting committee to raise the borrowing costs - that have now been at their record low for six and a half years - early next year.
Analysts believe that Federal Reserve officials will hike rates earlier than their BoE counterparts and that's why the potential impact of such a scenario on the UK economy has recently come into the spotlight.
The most immediate effect on the UK economy would be via the exchange rate, strengthening the greenback and making US imports to the UK more expensive and British exports to America relatively cheaper. The overall impact should not be negative given that the US accounts for less than a fifth of UK exports.
"The direct effects of a Fed hike [on the British economy] are unlikely to be very big," said Rain Newton-Smith, director of economics at CBI, the employers' organization.
However, economists also point to indirect consequences, including on the BoE's thinking and the stock market, which could be more significant.
Wednesday's disappointing data from Britain's manufacturing sector also add to calls for patience when it comes to interest-rate hike plans. Manufacturing output decreased by 0.5% in July compared with the previous year, the first outright fall in manufacturing output in two years.
"Once again, talk of rebalancing in the UK economy has proven premature," Liz Martins, UK economist at HSBC, commented on the report. She also added that the "double whammy of weak data releases may be the final nail in the coffin", dashing hopes that BoE policymakers would vote for a rate hike the following day, a prediction that was later confirmed.
Separate trade data released on Wednesday showed that the overall trade deficit widened to £3.4bn in July, with exports of goods falling by £2.3bn to £22.8bn, the lowest figure since September 2010.
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GBP/USD: Sterling Driven Higher by Dollar Weakness
Sterling remains elevated against the US dollar, approaching the highest level since August 27. The US dollar is broadly weakened by the likelihood of the Federal Reserve (Fed) not hiking rates this Wednesday.
A quiet start to the week will be followed by important events later on, with the Fed's meeting resolution on Wednesday in primary focus. The Fed's decision will be a key signpost with respect to the next move in not only equity markets, but the US dollar as well.
Sterling was seen elevated, up 0.27% to $1.5468 shortly after the European open.
UK traders will focus on another batch of UK macro data coming in on Tuesday, with the headline inflation figure the most anticipated. The UK CPI is expected to have risen 0.2% in August, moving back to positive territory from a 0.2% decline in the previous month.
The probability of the Fed hiking rates now stands at around 30%, but strengthening of most majors against the US dollar in trading today appears to indicate that markets think rates will be left on hold.
"Most majors, among a raft of others, are likely to see a short-term strengthening rally against the USD, but this is likely to dissipate as their longer-term trend in the second half of the year is further weakness against the USD. Thus any strengthening bounce after the Fed meeting could be a good entry point to sell those currencies," Angus Nicholson wrote on Monday.
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Preview: Is UK Labor Market Leveling Off?
The official figures on the UK labor market are expected to show the jobless rate remained at 5.6% in the quarter to July, while jobless claims, a narrower and less distant gauge tracking labor market activity, is expected to have declined by 5,000 people between July and August, significantly down from a two-year average of 27,300. The UK's Office for National Statistics (ONS) is releasing jobs data on Wednesday morning.
A smaller number of people moving out of the jobseekers' allowance scheme partly suggests employment in the UK has been slowly approaching its sustainable maximum.
Commenting on the previous month's jobs report, ONS statistician David Freeman said that "… while it's too early to conclude that the jobs market is leveling off, these [June] figures certainly strengthen that possibility. Growth in pay, however, remains solid".
The quarterly index of regular average weekly earnings – those stripped of bonuses – is seen rising 2.9%, compared with 2.8% measured a month before. Despite wages picking up slowly, they remain notably below the pre-crisis levels. While regular earnings increased on average by 4% before the economic downturn, between 2001 and 2008, the same measure of pay rose just 1.6% on average between January 2009 and May 2015.
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August 2015 UK labour market report claimant count +1.2k vs -5.0k exp
Details of the August 2015 UK labour market report data 16 September 2015
The wage numbers take centre stage in the report and the pound is going to love it.
The growth in wages ex-bonus is the highest since 2009 and rose 3.2% in July y/y
The private sector led the way (as always) with pay rising 3.4% vs 2.9% prior. Public sector pay rose 1.0% vs 1.1% prior
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British Pound to Euro + Dollar: GBP Outlook Brighter as Wages and Carney Point to Immintent Rate Rise
The pound sterling saw positive trade after the release of strong UK employment data and signals that the Bank of England is moving closer to raising interest rates.
Data out of the UK mid-week gave the British pound a lift - the pound to euro exchange rate conversion shot higher by 0.84 pct to deliver levels above 1.37 again.
The pound is now firmly within its near-term range against the euro. While it does not necessarily signal a run back to 1.40 it does indicate that the floor at 1.36 is almost a sure-fire bet to protecting against sustained losses.
The pound to dollar exchange rate conversion meanwhile rose a percent to reach 1.55.
Be aware that gains against the US dollar could unravel on Thursday the 16th if the US Federal Reserve opts to raise interest rates. For now though the GBPUSD has seen a positive swing in fortunes according to analyst Karen Jones at Commerzbank in London:
"GBP/USD has seen a strong rebound from 1.5325/30 - enough to suggest further upside potential to 1.5540 possibly 1.5615, the August high. This guards the 1.58175 recent high. Intraday dips are indicated to halt 1.5450 ahead of anther punch higher through the 1.5520 55 day ma."
The pound was higher across the board with gains coming against all the majors.
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GBP/USD forecast for the week of September 21, 2015
The GBP/USD pair went back and forth during the course of the week, but found the uptrend line that had previously been keeping this market bullish over the course of the summer to be far too resistive to continue going higher. With this, we believe that the market will now drift down to the 1.52 handle. However, it is a fairly tight range for longer-term traders, so we will trade this market off of the shorter-term charts with an eye towards the longer-term support and resistance barriers that we are stuck between.
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GBP/USD Forecast Sep. 21-25
GBP/USD posted gains for a second straight week, rising about 85 points. The pair closed the week at 1.5520. There are just four releases this week. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.
In the US, the Federal Reserve kept the markets guessing till the very last minute, but in the end refrained from raising rates. US unemployment claims were better than expected, but the Philly Manufacturing Index posted a sharp decline, well below expectations. Over in the UK, there was positive news on the job front, as wages growth jumped and unemployment claims beat expectations.
* All times are GM
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Sterling Edges Higher in 'Consolidation' Week
Sterling remained elevated on Monday and hovered near session highs after the European open, although the trading range was narrow due to a lack of drivers and economic fundamentals. In what is expected to be a consolidation week after the much anticipated Federal Reserve (Fed) meeting last week is likely to start on a quiet note, following the broadly muted risk sentiment on the market.
The UK's pound added mild gains in the early European session, up 0.17% to $1.5550.
Investors remain cautious and wait for stronger incentives as risk aversion on the equity markets prevails after the Federal Open Market Committee's decision to keep interest rates near zero stoked concerns about global growth.
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UK's Osborne says the exit from loose monetary policy is coming
UK fin min taking time out from sucking up to the Chinese in Shanghai to speak to BBC radio
"The BOE governor has signalled, I think, pretty clearly the direction that interest rates are heading"
Heading maybe, but no time soon
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GBP/USD: Cable Extends Losses as Buck Holds Rate Hike Ace
The cable plummeted on Tuesday and extended its freefall from the monthly high at $1.5659 seen on September 18, as the greenback showed strong momentum for the third consecutive day.
The buck left behind the initial disappointment from another delay for the Federal Reserve's (Fed) long-awaited initial rate hike, and still holds the highest cards for a rate hike among its major peers, while several Fed officials acknowledged a hike by the end of 2015 was still appropriate.
"As long as the markets continue to calm down, particularly emerging markets, there is definitely a reason to trade the dollar slightly higher, but not too much," Commerzbank FX strategist Esther Reichelt noticed. "Too much dollar strength could worsen the inflation outlook and could lead to the Fed not hiking."
On Tuesday, the British pound dived 0.84% to $1.5376 against the US dollar, falling from an intraday high of $1.5529 reached during the Asian market hours, while the US dollar index spiked to the two-week high at 96.42 points.
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