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UK Feb Mortgage Lending Lowest Since April 2013: CML
Mortgage lending reached £13.4 billion in February, which is down 9% on both the month before and the same month a year ago. This is the lowest monthly estimate for gross mortgage lending since April 2013, when lending totaled £12.4 billion, new credit data from the Council of Mortgage Lenders (CML) showed today.
Commenting on market conditions, CML chief economist Bob Pannell said that "earlier soft approvals data meant that weaker February lending has not come as a surprise. Seasonal factors tend to weigh on activity at the start of the year, but looking through these, the underlying picture appears to be stabilizing.”
On the outlook, Pannell said they “expect lending to improve in the coming months, as employment and earnings continue to pick up and the impact of recent stamp duty reforms start to feed through."
According to the latest data from the Bank of England (BoE), the number of loans secured for house purchases in the UK rose between December and January by 60,786, up from 60,349 in December. The volume of those loans increased by £1.6 billion which the BoE said was below a six-month average.
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.
UK average asking house prices rose 1% between February and March, the slowest growth for three years but still close to the June 2014 all-time high, according to the Rightmove House Price Index survey published earlier this week.
According to the latest Halifax survey, UK house prices declined 0.3% between January and February but the underlying quarterly figure, which is less volatile than the monthly change, increased 2.6% - the highest since September 2014.
Mortgage provider Nationwide informed earlier in March that the average asking price of properties had declined 0.1% between January and February. On a yearly basis, house price inflation slowed to 5.7% in February from 6.8% a month before, which Nationwide said was the sixth month of price growth moderation.
The slowing pace of the housing market led to a sharp slow down in the construction sector and new orders at the turn of the year.
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Most traders in London sleep when the Sun shines over the Pacific and this results to a very slow movement of GBPUSD pair between 9:00 PM GMT and 7:00 AM GMT.
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GBP/USD: Cable Gathers Momentum on Renewed Dollar Pressure
Cable was reaching for the $1.49 handle on Friday as market participants reconsidered Wednesday's FOMC statement ahead of the weekend.
The UK pound surged 0.91% to $1.4881 versus the US dollar on Friday, gaining momentum after the pair slipped below the $1.47 mark on Thursday.
The FOMC statement last Wednesday revealed that the Federal Reserve (Fed) revised its inflation and growth forecasts, while the central bank still wants to see further improvements in the labor market, implying that current labor market conditions are not sufficient for the Fed to raise rates.
This has been interpreted by some investors as dovish, however, another market contingent still sees the latest statement as hawkish, meaning the Fed is likely to start the liftoff at its June or September meeting.
Sterling was undermined further on Thursday by a somewhat dovish speech from the Bank of England's (BoE) chief economist Andrew Haldane, who said that the UK will probably fall into deflation while the chances the central bank will cut or raise the base interest rate are broadly evenly balanced.
"The British pound has seen its own fair share of volatility having been to new lows, up near-on 500 points then back to the lows again. A dovish set of Bank of England minutes alongside a slowdown in earnings growth sent sterling beneath 1.47 only for the Federal Reserve to send it flying to just short of 1.52. The BoE’s Andy Haldane gave the pound a good kicking for extra measure on Thursday when he suggested the decision on whether to cut or hike rates is finely balanced. The volatility is likely to die down in the next few days but a battle will certainly still be raging between dollar-bulls and bears. With major currencies massively oversold at multi-year lows and the Fed having shifted rate-hike expectations, the US dollar may become a bit more sensitive to disappointing economic data than it has been," Jasper Lawler, market analyst at CMC Markets UK wrote in a note on Friday.
Technical analysis
As with other US dollar major crosses, sterling erased all its gains from Wednesday and prices are moving toward the swing low of $1.4640.
The GBP/USD short term picture on intraday charts found resistance and bounce players took profits slightly below the barrier of $1.52.
The same as with EUR/USD and AUD/USD, we are expecting that volatility will calm down and GBP/USD will be trading in a range, in the ideal world, above the previous swing low and to take a little rest before another wave of selloff.
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GBP/USD: Sterling Gallops as Clash of the Titans Hits 3rd Day
The UK pound fought strongly back against the greenback on Friday, setting an intraday high at $1.4988 during the US trading session as market turmoil continued for the third consecutive day.
Sterling advanced 1.29% to trade at $1.4944 versus the US dollar on Friday, increasing almost 200 points from the opening level of $1.4759
Battle chronology
The battle started on Wednesday as the pound rocketed as the FOMC statement revealed that the Federal Reserve (Fed) revised its inflation and growth forecasts, while the central bank still wants to see further improvements in the labor market, implying that current labor market conditions are not sufficient for the Fed to raise rates.
This has been interpreted by some investors as dovish, however, another market contingent still sees the latest statement as hawkish, meaning the Fed is likely to start the liftoff at its June or September meeting.
Contrary on Thursday, the greenback experienced profound gains amid a somewhat dovish speech from the Bank of England's (BoE) chief economist Andrew Haldane, who said that the UK will probably fall into deflation while the chances the central bank will cut or raise the base interest rate are broadly evenly balanced.
Meanwhile on Friday, the US dollar index dived 1.71% to 97.560 points, while some analysts said the market experienced a partial correction amid dovish Fed comments, "this is just some counter-trend correction in the dollar and is transitory," Janney Montgomery Scott investment strategist Mark Luschini mentioned.
"I still think the bias for the dollar is to strengthen particularly when you consider it's always against something else. And that something else are other currencies whose central banks are either cutting rates or initiating some form of quantitative easing,'' he added.
Technical analysis
As with other US dollar major crosses, sterling erased all its gains from Wednesday and prices are moving toward the swing low of $1.4640.
The GBP/USD short term picture on intraday charts found resistance and bounce players took profits slightly below the barrier of $1.52.
The same as with EUR/USD and AUD/USD, we are expecting that volatility will calm down and GBP/USD will be trading in a range, in the ideal world, above the previous swing low and to take a little rest before another wave of selloff.
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GBP/USD Forecast March 23, 2015
The GBP/USD pair broke higher during the course of the session on Friday, but remains below the 1.50 level. We think that there is enough resistance above that the market will more than likely continue to struggle above, and offer more selling opportunities. Without though, we recognize that there is a significant amount of volatility in this area, so we are looking to check daily candles for signs of resistance and weakness that we can continue to sell. We have no interest whatsoever in buying this market as we see so much in the way of resistance all the way to at least the 1.53 level.
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GBP/USD Forecast Mar. 23-27
The British pound showed strong movement in both directions last week, and GBP/USD gained about 180 points. The pair closed the week at 1.4932. This week’s highlights are CPI and Retail Sales. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.
Updates:
British key numbers were mostly within expectations, and the pound took advantage of broad US dollar weakness after the Federal Reserve statement last week. The Fed certainly sounded more dovish despite removing the “patience” guidance, raising doubts about a June rate hike.
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GBP/USD: Ceasefire Ahead of Tuesday's Inflation Data
The cable was trading marginally lower Monday afternoon as traders took a rest after the previous three erratic days with huge up and down swings. The greenback attempted solid gains against the British pound during Asian trading hours, however its profit gradually evaporated as investors awaited inflation reports from both sides of the Atlantic, due tomorrow.
The GBP/USD was seen 0.08% lower at $1.4943, bouncing from an intraday low at $1.4837, while the US dollar index slid 0.90% to 97.029.
Shortly after the US opening bell, traders digested a fresh update from the housing sector, as the number of existing home sales rose 1.2% to 4.88 million units in February, worse than the expected increase of 2.0% to 4.92 million units.
Inflation data anticipated
On Tuesday, UK annual CPI is predicted to decline to 0.1%, while Bank of England (BoE) Governor Mark Carney said earlier in March that inflation is forecast to fall further toward zero in the months to come and remain there for the rest of this year.
Moreover, CPI data are also awaited from the US, with economists projecting an increase of 0.2% from a month ago, which would then leave the year-over-year change at a negative 0.1%. In January the prices fell 0.7% and the inflation rate turned negative for the first time since October 2009.
The core data, which excludes volatile food and energy prices to show the underlying trend, should see a 0.1% monthly gain that would result in a 1.7% year-over-year print.
Technical analysis
In keeping with the other major US dollar crosses, sterling erased all its gains from Wednesday and then returned back to a steady intraday uptrend towards previous highs, with attempts to break and stabilize above $1.5000 .
The GBP/USD short-term picture on intraday charts found resistance and bounce players took profits slightly below the barrier of $1.52.
As with EUR/USD and AUD/USD, we are expecting volatility to calm down, with GBP/USD trading in a range between $1.47 and $1.50.
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GBP/USD: Sterling Dips Ahead of UK Inflation data
The cable currency pair remained trading in a tight range on Tuesday, ahead of the European open, with UK CPI in focus.
The pound has lost some ground after comments last week from Bank of England (BoE) chief economist Andrew Haldane that suggested further easing might be necessary if inflation levels continued to decline.
Sterling was a little lower ahead of the market open, trading down 0.07% to $1.4938, while the pound had jumped to $1.5164 following the FOMC meeting last Wednesday.
The US dollar index, which measures the relative strength of the greenback against a basket of six major currencies, trimmed gains by a half and remained 0.18% higher at 97.38 levels.
Speaking earlier today, the Federal Reserve's (Fed) John Williams said the rise in the US dollar has had a huge effect on economic forecasts.
"Whether the Mr Haldane really believes that or not, it is clear that others on the committee do not, which suggests it remains unlikely, but that being said the recent rise in the value of the pound against the euro does appear to be of some concern to some BoE officials, which suggests that this could well be a little jawboning in an attempt to talk the pound down a little," Michael Hewson from CMC Markets added.
UK inflation is in focus on today's UK schedule. Trades will eye the latest CPI data for February, with the headline number expected to fall further from 0.3% to 0.1%, as the latest price energy price cuts manifest themselves in this month’s numbers. Lower food prices are also expected to feed through as well, though core prices are expected to remain stable at 1.3%.
Moreover, the US will also release it's CPI figures later today. US CPI for February is expected to come in at -0.1%, though excluding food and energy is expected to come in at 1.7%. "After last week’s rather dovish Fed meeting caught some in the market rather off guard, it would appear that expectations remain for some form of Fed action later this year," Hewson added.
Monday saw the focus switch to Fed vice chair Stanley Fischer, who gave a comprehensive view of what he expects from policy going forward. Fischer feels a rate hike is likely warranted this year and the path thereafter is unlikely to be steady. Instead, it’ll continue to be data-dependant, which essentially means there is no rush unless data is shooting the lights out.
"It is clear that Fed officials want the markets to think they are closer to raising rates than at any time in the last six years. Last night’s comments from Fed Vice Chairman Stanley Fischer certainly bear that out, but the fact remains that with prices continuing to turn downwards it is becoming increasingly difficult to see what the catalyst for a rate rise would be," Hewson added.
Technical analysis
In keeping with the other major US dollar crosses, sterling erased all its gains from Wednesday and then returned back to a steady intraday uptrend towards previous highs, with attempts to break and stabilize above $1.5000.
The GBP/USD short-term picture on intraday charts found resistance and bounce players took profits slightly below the barrier of $1.52.
We expected EUR/USD and AUD/USD volatility to calm down, and the same scenario happened with GBP/USD.
In the short-term outlook we are more bullish than bearish and believe that sterling will cross above the $1.5000 level and try to attack a spike high slightly below $1.52.
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UK House Prices Slow as Mortgage Market Moderates
House prices in the UK slowed to 8.4% over the year to January, down from growth of 9.8% a month before. On a monthly basis prices declined 0.2%, the Office for National Statistics (ONS) informed on Tuesday. The total price index was again driven primarily by London property prices, although they too slowed the most since December 2013.
House price inflation has been slowing in the last six months due to demand being partly tamed by high prices and the mortgage market moderating at the turn of the year.
According to the latest data from the Council of Mortgage Lenders (CML), mortgage lending reached £13.4 billion in February, which was down 9% on both the month before and the same month a year ago, and the lowest monthly estimate for gross mortgage lending since April 2013.
The CML survey showed that seasonal factors weighed on activity at the start of the year, "but looking through these, the underlying picture appears to be stabilizing."
According to the latest data from the Bank of England (BoE), the number of loans secured for house purchases in the UK rose between December and January by 60,786, up from 60,349 in December, but the overall number of approvals was significantly below the post-crisis peak seen in first half of last year, and well below the pre-crisis levels.
According to commercial surveys, price growth cooled in the first months of this year. The average UK asking house price rose 1% between February and March, the slowest growth for three years but still close to the June 2014 all-time high, the Rightmove House Price Index survey estimated last week.
The latest Halifax survey showed UK house prices declined 0.3% between January and February but the underlying quarterly figure, which is less volatile than the monthly change, increased 2.6% - the highest since September 2014.
Mortgage provider Nationwide informed earlier in March that the average asking price of properties had declined 0.1% between January and February. On a yearly basis, house price inflation slowed to 5.7% in February from 6.8% a month before, which Nationwide said was
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GBP/USD: Greenback Supported by Inflation & Housing Data
The British pound declined against the greenback on Tuesday afternoon on a data-heavy day on both sides of the Atlantic, with increased focus on inflation updates, while new home sales skyrocketed to a record high.
The cable slid 0.51% to trade at $1.4877, falling from the intraday high at $1.4983, while the US dollar index added 0.15% to 97.176 points.
Meanwhile, two Federal Reserve officials spoke to media, and San Francisco Fed President John Williams mentioned that mid-year may be the time when the Fed would start considering raising rates and will lift them "gradually", while the current period of ultra-low interest rates is "no longer appropriate for the US economy", according to St Louis Fed President James Bullard.
Focus on inflation
The macro calendar brought important updates of both UK and US inflation data. First, the pound fell under pressure as the UK consumer price index (CPI) remained flat on an annual basis in February, down from 0.3% seen during the previous period, while CPI up-ticked 0.3% on a monthly basis, in line with expectations.
However, in the US February's inflation data revealed an annual rate of zero growth, compared to the 0.1% drop previously, while consumer prices increased 0.2% month-to-month in February.
Later in the day, February's new home sales showed a surprising jump to 539,000 units, a hike of 7.8%, when compared with the previous month.
Finally, the Markit US Manufacturing PMI increased to 55.3 points in March, moderately beating the estimate of 54.6 points, and an improvement from 55.1 booked in February.
Technical analysis
In keeping with the other major US dollar pairs, sterling erased all its gains from Wednesday and then returned back to a steady intraday uptrend towards previous highs, with attempts to break and stabilize above $1.5000.
The GBP/USD short-term picture on intraday charts found resistance and bounce players took profits slightly below the barrier of $1.52.
We expected EUR/USD and AUD/USD volatility to calm down, and the same scenario happened with GBP/USD.
In the short-term outlook we are more bullish than bearish and believe that sterling will cross above the $1.5000 level and try to attack a spike high slightly below $1.52.
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