GBPUSD news - page 10
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U.K. GDP Second Estimate Due On Friday
The second estimate for U.K. GDP is expected to be released on Friday, headlining a light day for the European economic news.
At 3 am ET, the Turkish Statistical Institute is due to release its unemployment report. The jobless rate is expected to edge down to 8.9 percent in May from 9 percent in April.
At 4 am ET, Statistics Norway is scheduled to release its trade balance report for July. In June, a trade surplus of NOK 17.8 billion was recorded.
At 4:30 am ET, U.K 's Office for National Statistics will release its second estimate GDP figures and its index of services report. GDP is expected to grow 3.1 percent year-over-year and 0.8 percent quarter-over-quarter in the second quarter, confirming the flash estimate.
The index of services is estimated to increase 1 percent month-over-month in June, the same rate as in May. In the three months to June, the index is expected to grow 0.3 percent sequentially, the same rate as in the preceding three months.
U.K. GDP 0.8% vs. 0.8% forecast
U.K.’s gross domestic product rose in the last quarter, preliminary official data showed on Friday.
In a report, the U.K. Office for National Statistics said that GDP rose to 0.8%, from 0.8% in the preceding quarter.
Analysts had expected U.K.’s gross domestic product to rise 0.8% in the last quarter.
Pound Set for Worst Losing Streak Since 2010
The pound headed for a sixth weekly decline against the dollar, its longest run in four years, as investors pushed back their expectations for the timing of the Bank of England’s first interest-rate increase since 2007.
Sterling weakened for a third day against the euro even as a report today showed U.K. gross domestic product expanded 0.8 percent in the second quarter, in line with a previous reading. U.K. government bonds advanced, with 10-year yields extending a sixth weekly drop, after BOE Governor Mark Carney said two days ago that policy makers will pay more attention to Britain’s ailing wage growth when deciding on interest rates.
“The key that drove sterling in the second quarter of this year was quite specifically the expectation that the Bank of England was going to be ahead of central banks in terms of hiking rates,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London. “It’s about the interest-rate story rather than anything else and I don’t think that GDP number radically changes the picture.”
Sterling was little changed at $1.6689 as of 11:01 a.m. London time after dropping to $1.6658 yesterday, the least since April 8. The currency has declined 0.5 percent this week, set for the longest run of losses since June 2010. The pound was at 80.08 pence per euro, after touching 80.36 pence yesterday, its weakest level since June 12.
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GBP/USD forecast for the week of August 18, 2014
The GBP/USD pair had a negative week, breaking solemnly below the 1.67 handle at one point. We did get a little bit of a bounce and it does appear on the shorter-term charts that we are going to get a bit of support in this region, but at the end of the day we think that we need to clear the top of the range for this week in order to even consider buying. With that, we are on the sidelines at this point in time because we believe that there is a significant amount of support at the 1.65 handle as well.
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GBP/USD weekly outlook: August 18 - 22
The pound posted its sixth straight weekly loss against the dollar on Friday, despite data showing that the U.K. economy grew at the fastest annual rate since final quarter of 2007 in the year to June.
GBP/USD ended Friday’s session at 1.6691, hovering just above the four-month trough of 1.6656 set on Thursday. For the week, the pair was down 0.51%.
Cable is likely to find support at around 1.6625 and resistance at 1.6740.
The pound found some support after revised data on Friday showed that the U.K. economy grew at an annual rate of 3.2% in the year to June. Economists had expected that annual rate of growth to remain unchanged from the preliminary estimate of 3.1%.
Second quarter growth remained unchanged from the initial estimate of 0.8%.
Safe haven demand for the greenback continued to be underpinned on Friday as heightened geopolitical tensions soured market sentiment.
Tensions over the crisis in Ukraine escalated following reports that Ukraine's military attacked and destroyed a number of armored vehicles that entered the country from Russia.
Sterling had weakened broadly earlier in the week after the Bank of England halved its forecast for wage growth on Wednesday and said the rate of pay growth would be critical in determining the future timing of rate hikes.
BoE Governor Mark Carey also reiterated that when rates do start to rise they will do so a “small, slow” manner.
Sterling was also lower against the euro, with EUR/GBP advancing 0.24% to 0.8028 late Friday, not far from Thursday’s seven week highs of 0.8035.
The single currency drifted higher amid expectations for fresh stimulus from the European Central Bank following data on Thursday showing that the euro zone economy stagnated in the second quarter.
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Carney Says BoE Won't Wait Real Wages To Rise Before Lifting Rates
The Bank of England would not wait for real wages to rise before raising bank rate from its current 0.50 percent level, Governor Mark Carney said in an interview.
"We have to have the confidence that real wages are going to be growing gradually" before raising rates, he told the Sunday Times. "We don't have to wait for the fact of that turn to do so," he added.
In the quarterly Inflation Report, released on August 13, the bank said future developments on wages would have a greater influence on interest rate decision. The bank suggested that the rates will not rise soon as wage growth remain subdued and the economy faces challenges from external environment.
Carney said the U.K. is "more than halfway" to economic recovery, Carney told Sunday Times. The interest rate will have to rise from record low. So the people should plan accordingly, said Carney.
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U.K. July inflation slows to 1.6%, core CPI falls to 1.8%
Consumer price inflation in the U.K. accelerated less than expected in July, falling to a two-month low, official data showed on Tuesday.
In a report, the U.K. Office for National Statistics said the rate of consumer price inflation slowed to a seasonally adjusted 1.6% last month from 1.9% in June and compared to expectations for a reading of 1.8%.
Month-over-month, consumer price inflation declined 0.3% in July, compared to estimates for a 0.2% decline.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 1.8% last month, down from 2% in June. Analysts had expected core prices to rise 1.9% in July.
The retail price index increased 2.5% in July, below expectations for a 2.6% gain and down from 2.6% in June.
The data also showed that the house prices index climbed 10.2% in June, compared to forecasts for a reading of 11.5% and following a 10.5% increase in May.
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UK House Price Inflation Eases Slightly In June
House prices in the United Kingdom rose at a slightly slower pace in June compared to May, but the pace of increase remained solid, figures from the Office for National Statistics showed Tuesday.
The house price index climbed 10.2 percent year-on-year following 10.4 percent rise in May. Economists had forecast 10.2 percent gain for June.
"This follows the moderate house price increases the UK has experienced since April 2012 and is driven in large part by increases in London," the ONS said. "The average UK mix-adjusted house price in June 2014 was GBP 265,000."
Month-on-month, house prices rose 0.5 percent in June, after a 0.8 percent increase in May.
With an annual increase of 19.3 percent, London continued to top the list of UK regions with strong gains in house prices. Prices rose 9.7 percent in the South East and 7.9 percent in the East.
Excluding London and the South East, house prices rose 6.3 percent in the 12 months to June.
House price inflation was 10.7 percent in England, 3.5 percent in Wales, 6 percent in Scotland and 4.9 percent in Northern Ireland.
Bank of England minutes show interest-rate vote split 7-2
Two dissenters in the MPC: Weale and McCaffety voted for a rate hike. The 7:2 vote in the 9 strong Monetary Policy is a big change. There was speculation that the minutes would reveal that one or more members had voted for a rate hike already at this August meeting. Martin Weale was singled out as a candidate for voting against the majority.
GBP/USD was emerging from the lows towards the publication. It touched 1.66 earlier and stood on 1.6630 in the second before the event. The British pound is moving higher, with cable standing at 1.6670 at the moment
Bank of England splits over rate hike for first time in three years
Bank of England policymakers broke ranks over interest rates for the first time in three years this month, when two unexpectedly voted to tighten policy and revived speculation about a 2014 rate hike.
Former academic Martin Weale and business economist Ian McCafferty both voted to raise interest rates to 0.75 percent from 0.5 percent, according to minutes released on Wednesday of the nine-member Monetary Policy Committee's meeting on Aug. 6-7.
Their dissenting votes ended the longest period of unanimity in the MPC's 14-year history. Sterling rebounded from a four-month low and government bonds fell as expectations for an early rise in British interest rates were revived.
Last week, the BoE slashed its forecasts for wage growth for 2014 and said it did not want to raise rates until stronger wage rises looked imminent - a view shared by the majority of the MPC in Wednesday's minutes.
But Weale and McCafferty believed recent declines in unemployment suggest wage growth could accelerate, and that the economy was running at close to capacity and rates needed to rise now.
"Since monetary policy ... could be expected to operate only with a lag, it was desirable to anticipate labour market pressures by raising the Bank Rate in advance," they said.
They added that an early rate rise would help ensure that future increases were gradual.
Weale has a record of hawkish positions on monetary policy. He backed rate rises in 2011 and opposed introducing forward guidance in August last year on the grounds that it lacked strong enough safeguards against high inflation.
McCafferty joined the MPC in 2012 from the Confederation of British Industry. He had previously raised concerns about the slow growth in British productivity since the financial crisis, which could push up inflation.
OTHERS TO FOLLOW SUIT?
Some economists doubted that other members of the MPC would soon follow suit. Unlike policymakers at some other central banks, MPC members at the BoE have sometimes dissented against their colleagues for months.
But three members of the MPC - chief economist Andy Haldane, deputy governor Minouche Shafik and external member Kristin Forbes - have been on the committee for less than three months, so may be reluctant to go out on a limb.
"Historically, dissenting votes have signalled that a policy change is imminent no more than half of the time," said economists at Fathom Consulting.
Moreover, economic data has swung against an early rate rise since August's vote. Consumer price inflation has dropped further below target to 1.6 percent, and wages fell year-on-year for the first time in five years - albeit partly due to one-off effects.
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