GBPUSD news - page 37
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GBP/USD forecast for the week of March 2, 2015
The GBP/USD pair initially tried to break out during the course of the week, but found quite a bit of resistance above the 1.55 handle. This is the top of what we recognize as the potential consolidation area in this general vicinity, and as a result we believe that the market is getting ready to go lower. If we break down lower, and clear the bottom of the range from the week, we believe that this market should then head to the 1.53 level next, and then possibly the 1.50 handle. This isn’t much of a surprise though, because of the large, round, psychologically significant number such as this one is. There is a significant amount of resistance all the way to the 1.58 handle, so as a result even if we break above the top of the shooting star, we believe that this market still cannot be bought until we clear the 1.58 level.
We believe that this market will continue to bang around between the 1.55 handle and the 1.50 level. Because of this, we feel that the market is one that will be difficult to hang onto for the longer term, but if you are patient enough and can deal with the volatility, I believe that this market could offer quite a bit in the way of profit. Even if we break above the top of the shooting star, it’s only a matter time before we form another resistive candle as far as we can tell.
If we do break above the 1.58 handle, the more likely pattern will then be to the 1.60 level. At that level we would anticipate quite a bit of resistance as well, so really this point in time we don’t have any interest in buying this pair. The US dollar continues to be the favored currency by most traders, so of course it will be in this particular pair as well. Whether or not we can get down below the 1.50 level is a completely different question, so we aren’t even addressing that at this point.
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GBP/USD Forecast Mar. 2-6
The British pound posted slight gains last week, as GBP/USD closed at 1.5426. This week’s highlights are the PMI reports. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.
British Second Estimate GDP matched the forecast, with a reading of 0.5%. In the US, Janet Yellen’s testimony signaled that a Fed rate hike is not imminent and that wage growth and inflation will need to improve first.
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GBP/USD: Cable Eases Ahead of PMI, Dollar Broadly Higher
Cable was heading into the London session on Monday slightly weaker, trading at the $1.54 handle and around 0.2% lower on the day. Sterling is still holding strong and if it trades above $1.5350, the medium-term trend is in favor of bulls.
Investors are now focusing on the UK manufacturing PMI due later in the day, which is expected to tick higher from 53.0 to 53.3.
Moreover, the same index is expected from the US and should stay at 54.3, while the US economy will also reveal ISM's manufacturing gauge, which is predicted to soften from last month's 53.5 to 53.0.
Therefore, trading will be driven by macro news on Monday, but as the US Chicago PMI dropped from 59.4 to 45.8 on Friday, markets might be positioning for disappointing releases today.
The greenback was broadly higher on Monday after the unexpectedly better US GDP for the fourth quarter on Friday, which rose 2.2% on a quarter-on-quarter basis, above expectations of a 2.0% print. However, the US economy slowed from the third quarter's 2.6%.
"The UK economy is expected to continue to remain resilient in Q1, with a similar positive February manufacturing sector reading of 53.4, an improvement from 53. The latest lending data for January is also expected to show a pick-up as lower oil prices give a boost to consumer confidence and encourage a pickup in credit figures as mortgage approvals and consumer credit get a boost on the back of reduced concerns about a rise in interest rates," analysts at CMC Markets believe.
Technical analysis
GBP/USD stayed above the important level of resistance $1.55 only for a few hours just to be sold off heavily with the rest of the US dollar crosses.
We do not like sterling right now at all, as daily and intraday charts are in divergence and intraday charts are showing a nice, steady uptrend despite the sell-off.
As we mentioned previously, we still like the short position over the long but at higher prices, ideally at least at $1.56. Until then we are just monitoring the price action and waiting for the right prices to scale into the short. We rather missed the train by not trading it to be in trouble with an early short.
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UK Mortgage Market Remains Steady in January
The number loans secured for house purchases in the UK rose between December and January by 60,786, up from 60,349 in December but below market estimates, the Bank of England (BoE) credit report showed on Monday.
The volume of those loans increased by £1.6 billion which the BoE said was below a six-month average.
The report also showed consumer credit increased in January driven partly by increased consumers' confidence and significantly low inflation.
A steady flow of secured credit also continues to support the UK housing market, where house price inflation has been moderating slightly from the early 2014 peaks, but remains elevated in most parts of the country.
Mortgage provider Nationwide informed today house prices slowed for the sixth consecutive month in February to 5.7%, from 6.8% a month before.
The BoE today's credit report also showed the non-financial sector enjoyed an increased credit flow at the start of this year.
Loans to non-financial businesses increased by £1.9 billion in January, compared to the average monthly decrease of £0.7 billion over the previous six months, while loans to small and medium - sized enterprises (SMEs) increased by £0.1 billion, compared to the average monthly decrease of £0.4 billion, the report said.
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UK Construction Rebounds to Four-Month High in Feb : PMI
Despite moving off the peaks seen at the start of the previous year, the UK construction sector continued to hold its momentum in February, partly driven by a revival in investment in the public and commercial housing markets, and bolstered by easier credit conditions and a low interest rate environment.
Activity in the sector, which accounts for some 6.3% of the UK's total GDP, remained firmly above the contraction line for the 22nd consecutive month in February, with the Markit/CIPS headline PMI rising more than expected to 60.1, up from last month's 59.1.
According to the official data, output in the UK construction sector plunged markedly in the fourth quarter of 2014, dropping 2.1% and following a rise of 1.6% in the previous quarter. Still, output in the sector was 4.8% higher than in the same quarter in 2013, which the official statisticians said was the sixth consecutive period of annual quarter-on-quarter growth.
In its February 'Agents' Summary of Business Conditions' report, the Bank of England (BoE) said "construction output growth had eased slightly, but had been robust overall ... Construction growth had become more broad-based over the past year, as a slowing in house building growth had been largely offset by a recovery in commercial activity."
Markit also reported earlier this week that business activity in the UK manufacturing sector had hit a seven-month high in February. Growth rates in output and new orders both strengthened as the domestic market remained solid, but export orders decreased. Production costs continued to fall again in February, Markit said.
Market participants will now be watching closely data on the services sector activity – the UK's largest segment of the economy. Expectations ahead of Wednesday's services PMI release suggests activity picked up to 57.5 from 57.2 a month before. Markit's insight into February's business performance in the three major sectors of the economy comes ahead of the BoE's rate announcement on Thursday.
The economy slowed at the end of 2014 but business surveys published for the first two months of this year suggest the economy picked up pace again. Still, there is no doubt the BoE remains in wait-and-see mode for now, and most probably for the most part of this year as inflation is set to remain around zero throughout this time.
While BoE policymakers see more downside risks to near-term inflation from cheap oil and euro zone deflation, the risks to the medium-term inflation loom on the upside, driven by prospects of stronger domestic price pressures and a further strengthening of the labor market.
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GBP/USD: Sterling Falls Below $1.5350 as PMI Slows Growth
The latest services PMI came out at 56.7, below expectations of 57.5 and against last month's reading of 57.2, Markit informed on Wednesday.
Cable edged lower after the release and was trading below $1.5350, losing 0.10% on the day.
On Monday, the UK manufacturing PMI came out above expectations of 53.3 and printed 54.1, reaching a seven-month high. Moreover, mortgage approvals rose from 60,300 to 60,800.
Moreover, traders are cautious as they await the Bank of England interest rate policy decision on Thursday.
Technical analysis
We do not like sterling right now at all, as daily and intraday charts are in divergence and hourly charts are showing a nice, correction phase of its uptrend. The level around $1.5330 is very important for sterling from an intraday perspective as the area was already tested six times.
If the level is broken the intraday uptrend is over.
As we mentioned previously, we still like the short position over the long but at higher prices, ideally at least at $1.56. Until then we are just monitoring the price action and waiting for the right prices to scale into the short. We rather missed the train by not trading it - like buying in to the trouble with an early short position and chasing the price action
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GBP/USD: Cable at Monthly Low as Pound Hit by US Data
The British pound was unprotected again on Wednesday against the heavy US artillery, with the GBP/USD cross plummeting by three big figures since last Thursday.
The British pound suffered during US trading amid upbeat services data, while the latest statements by Federal Reserve (Fed) officials along with the Fed's fresh Beige Book update still indicated that the central bank might increase rates in the middle of 2014.
The cable was trading 0.62% lower at $1.5260 and pushed its monthly low to $1.5251.
Investors closely watched the latest report of Fed's Beige Book in the afternoon as it came just two weeks before next Federal Open Market Committee. The Fed confirmed its view on the expanding economy, albeit impacted by severe weather in some districts. Moreover, the central bank saw wage pressures sustaining moderately during observed period.
"Most Districts reported flat to slight increases in overall prices," the Beige Book showed. As Fed chief Janet Yellen indicated last week, inflation will be the most thoroughly discussed economic variable at the March 17/18 meeting.
Earlier in the morning, Chicago Fed President Charles Evans presented his dovish comments on rate hike, while Kansas Fed President Esther George supported moving rates in the middle of this year.
Solid US macro data
The US economy added 212,000 new jobs to its private sector in February according to Automatic Data Processing, while analysts had expected the report to show 219,000 positions were created, compared to an upwardly revised 250,000 added last month. However, the most crucial figure from the US economy, the non-farm payrolls report, is due on Friday.
Meanwhile, Markit Economics publish its services PMI that hit four-month high at 57.1 points last month, along the upbeat figure from the Institute for Supply Management, whose the non-manufacturing Composite PMI reached to 56.9 in February.
In the UK, the latest services PMI came out at 56.7, below expectations of 57.5 and down from last month's reading of 57.2, Markit informed on Wednesday.
Technical analysis
We do not like sterling right now at all, as daily and intraday charts are in divergence and hourly charts are showing a nice correction phase of the uptrend. The level around $1.5330 is very important for sterling from an intraday perspective as the area has already been tested six times.
If the level is broken the intraday uptrend is over.
As we mentioned previously, we still favor a short position over a long but at higher prices, ideally at least as high as $1.56. Until then we are just monitoring the price action and waiting for the right prices to scale into the short.
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GBP/USD: Cable Loses Steam Ahead of BoE Meeting
Sterling was weaker on Thursday following the set of positive US data, which helped the greenback to recover the lost ground. Cable also broke its key technical support level at $1.5350, stops were hit and the pair fell around 100 pips and was trading around $1.5240 on Thursday morning.
On Wednesday, the ISM services PMI figure came out at 56.9, while analysts had predicted 56.5 and the last month's reading stood at 56.7. Moreover, the US economy added 212,000 new jobs to its private sector in February, Automatic Data Processing's report showed on Wednesday, which set the path for solid non-farm payrolls on Friday.
Investors now focus on today's Bank of England meeting, which is expected to keep everything where it currently is, the main rate should stay at 0.5% and the amount of QE is predicted to remain at £375 billion a month. The BoE's meeting will only have a minor impact on sterling as it's a non-moving event, since the monetary policy is not expected to change.
Looking ahead, the most crucial number from the US economy, the non-farm payrolls report, is due on Friday and will be closely watched as the next Fed meeting looms.
Therefore, trading on cable will be mainly driven by the US fundamentals, rather than technical parameters.
"ADP survey in line with expectations and a solid improvement in the employment component of the non-manufacturing ISM index are supporting positive expectations for Friday’s US nonfarm payrolls. Jobless claims and factory orders are due on Thursday but are unlikely to trigger significant reaction. Even though US front-end end yields dipped a couple of basis points on Wednesday, they have been on an upward trajectory since late February, suggesting markets are again regaining confidence in the view that the Fed will be tightening policy by Q3," analysts at BNP Paribas believe.
Technical analysis
The intraday uptrend has been broken and looks finished. As prices were unable to hold above $1.5350 bears are in control again and very likely will try to drag prices back to the previous long-term swing low at $1.4950.
The general trend on the daily chart is supporting this scenario and price on the intraday charts is also unable to find support as selling continues from the peak at $1.5551.
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GBP/USD: Sterling Flat After Monetary Policy Unchanged
The BoE's Monetary Policy Committee (MPC) left the base interest rate unchanged at 0.5% and the volume of asset purchases at £375 billion. More on the vote composition and sentiment among the rate-setters will be revealed in the MPC minutes due on March 18.
Shortly after the release, the pound was trading at $1.5240, mostly unchanged on the day, with almost no initial reaction whatsoever.
Looking ahead, the most crucial number from the US economy, the non-farm payrolls report, is due on Friday and will be closely watched as the next Fed meeting looms.
Therefore, trading on cable will be mainly driven by the US fundamentals, rather than technical factors.
Technical analysis
The intraday uptrend has been broken and looks finished. As prices were unable to hold above $1.5350 bears are in control again and very likely will try to drag prices back to the previous long-term swing low at $1.4950.
The general trend on the daily chart is supporting this scenario and price on the intraday charts is also unable to find support as selling continues from the peak at $1.5551.
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February 2015 Bank of England GFK 12m inflation 1.9% vs 2.5% prior
February 2015 Bank of England/GFK 12m inflation data report
This is a quarterly report, it's not market moving but lower expectations of inflation might have just helped give cable the nudge it needed through 1.5200 to 1.5193