GBPUSD news - page 46
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GBP/USD forecast for the week of April 27, 2015
The GBP/USD pair initially fell during the course of the week but found enough support to go well above the 1.50 handle by the time we closed on Friday. We are breaking out towards the 1.52 handle, and if we can break the top of the range we feel that this market will then head to the next major resistance barrier at the 1.55 handle. Ultimately though, we think that it is a market that still has a significant amount of bearishness to it, but if we did manage to clear well above the 1.55 handle, at that point in time we would have to consider it a trend change.
This market has caught us off guard a little bit, as the strength that was shown over the last several sessions was a bit unexpected. Ultimately though, it takes quite a bit to change the trend of a currency pair, but right now this is probably the one market that is showing the potential to do just that, and go against the strength of the US dollar.
We believe that the next week or two will determine what happens next in this particular pair, and probably have a ripple effect for the next several months. If we find resistance somewhere in this area, or even in the 1.55 area, we would not hesitate to sell as it would simply be labeled as a “relief rally.” On the other hand, if we broke out to the upside and it was in fact a bit of a trend change in our opinion, we would not only buying this pair but we would also be of the “buy-and-hold” type of mentality, something that we have not been able to say about any currency but the US dollar for quite some time.
We will have to wait to see what this next week or two brings, the long-term traders certainly are going to have to make fairly significant decisions here soon. Ultimately, we simply follow with the market gives us and it looks like it’s going to give us something soon.
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GBP/USD Forecast Apr. 27 – May 1
The British pound continued to rally last week, as GBP/USD gained over 200 points. The pair closed at 1.5188, marking its first weekly close above 1.50 in almost two months. This week’s highlight are Preliminary GDP and Manufacturing PMI. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.
The US dollar had another awful week, as housing and durable goods orders numbers were a mix. In the UK, Retail Sales was below expectations, but the disappointing news didn’t hinder the pound’s impressive rally.
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GBP/USD: Sterling Crawls Towards $1.52
Sterling retreated somewhat from overnight highs on Monday, but still hovered near it's highest level in almost two months.
The dollar weakened against most of its peers after a government report showed a key measure of business investment, the so-called core orders for durable goods, fell for the seventh consecutive month in March. That clouded the strong 4% jump in headline bookings, mainly fueled by greater transportation orders.
Sterling bounced back ahead of the European open and crawled back towards overnight peaks just under $1.52. GBP/USD was virtually flat at $1.5185, with it's overnight peak of $1.5187 the highest level since March 6.
The primary driver for the pair will be the Federal Reserve (Fed) meeting on Wednesday along with the release of US Q1 GDP.
"Monetary policy divergence will be a key theme in the week ahead with the USD center stage as the FOMC meets and advanced estimates for Q1 GDP are released. We expect the FOMC’s message to remain neutral and data dependent; but risks are likely skewed to a hawkish/USD friendly interpretation given how little Fed tightening is now priced for the next six months," BNP Paribas wrote on Monday.
Michael Hewson from CMC Markets UK has a different expectation from the Fed meeting. "What does appear to be certain is that the prospect of a US rate rise has been put back as a result of recent US data weakness, despite some FOMC members attempts to keep the June rate meeting in play for a possible policy change," he said.
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GBP/USD: Cable Out of Daily Lows, Eyes $1.52
The GBP/USD pair bounced higher from the $1.5100 barrier during the US morning trade, around 0.10% lower on the day, as dollar bulls' activity ahead of the Federal Open Market Committee meeting later in the week faded somewhat.
Traders are anxiously waiting for this week's Federal Reserve (Fed) meeting - concluding on Wednesday. The Fed should confirm the neutral stance and keep the "data-dependent" language, while traders are underpricing September's rate hike. US macro figures have surprised negatively in the previous weeks, which might cause some uncertainty ahead of the meeting as the central bank might sound more dovish.
Although the broader picture remains the same and market participants are expecting the Fed to raise rates later this year, the US rate market is only very lightly positioned for this to happen.
Moreover, sterling remains muted as the parliamentary election looms in the UK, with political risks spreading uncertainty.
"Latest manufacturing survey evidence from the CBI is somewhat mixed, pointing to decent domestic demand but overall orders being held back by muted foreign orders. The CBI indicated that sterling’s strength against the euro is proving challenging for UK manufacturing exporters. Indeed, the CBI reported that manufacturers consider that their competitiveness in the European Union is at its lowest level since April 2000. Nevertheless, the monthly manufacturing CBI survey shows some rebound in foreign demand in April after a slump in March," Howard Archer, chief UK and European economist at IHS Global Insight wrote in a note on Monday.
According to the CFTC and Rabobank, GBP shorts have dropped from recent peaks. Relatively high UK yields are lending GBP some support. However, the pound is vulnerable to political uncertainty in the approach to the May 7 UK general election, while USD longs have softened back to their lowest level in four weeks. That said, from an historical perspective, they remain elevated.
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GBP/USD: Cable Trades Over 1-Month High Ahead of GDP
The GBP/USD pair steadily rose, nearing its one-month high amid bearish US dollar sentiment ahead of the Federal Open Market Committee (FOMC) meeting on Wednesday.
The British pound was up 0.41%, trading at $1.5252 against the greenback, after reaching the intraday low of $1.5108.
The UK’s April CBI Industrial Trends Survey released on Monday "provided some reasons to be optimistic that the manufacturing sector’s poor performance in Q1 does not herald the beginning of a prolonged period of weakness," UK economist at Capital Economics, Paul Hollingsworth, said in a research note.
Traders are gearing up for Tuesday’s British GDP data release. Economists estimate first quarter growth will slow to 2.6% from 3% in the UK.
"The first estimate of GDP (09.30 BST) seems likely to show that the recovery slowed in Q1 and may therefore put the coalition parties on the back foot just nine days before the general election," senior UK economist at Capital Economics, Samuel Tombs, said.
The upcoming British general election is likely to provide an air of uncertainty in the short-term. "Relatively high UK yields are lending GBP some support. However, the pound is vulnerable to political uncertainty in the approach to the May 7 UK general election," senior FX strategist at Rabobank Jane Foley said in a note to clients.
Meanwhile, the key weekly driver for the currency pair is Wednesday’s FOMC meeting. Economists expect the Fed to confirm the neutral stance and keep the "data-dependent" language.
At the same time, traders are underpricing September's rate hike. In the long term, market participants are expecting the Fed to raise rates later this year, while the US rate market is only very lightly positioned for this to happen.
US macro figures have weighed negatively in the previous weeks, which is likely to add some uncertainty ahead of the meeting.
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Q1 2015 UK GDP flash 0.3% vs 0.5% exp q/q
Details of the UK's first GDP data for Q1 2015
In the services sector business and financials did the damage posting only a 0.1% gain following 1.3% in Q4
GBP/USD: Sterling Holds Firmly Above $1.53 at 7-Week High
The UK pound maintained overnight gains on Wednesday after it added nearly 200 pips in the previous session, with the soft US dataflow remaining the primary downward driver behind the broad greenback sell-off.
In Tuesday's session, sterling shrugged off the losses seen after UK Q1 GDP unexpectedly came in at 0.3%, with weakness across construction and manufacturing. However, dovish expectations from the Federal Open Market Committee (FOMC) meeting later today, together with a weak US Q1 GDP forecast, sent cable back above $1.53, a level unseen in seven-weeks.
Ahead of the European open on Wednesday, sterling held its gains and traded 0.05% higher at $1.5345.
Most traders remain cautious ahead of the outcome of FOMC meeting and the key US Q1 GDP figures, but the overall sentiment is to liquidate long USD positions in the lead up to the end of the meeting, as they expect a dovish tone.
Markets expect today's US Q1 GDP to fall sharply to 1% from 2.2% in Q4. "While this is disappointing it won’t be unexpected, but a lower number would raise bigger concerns that it could get revised even lower. This is because US GDP does have a habit of getting revised lower, and any further weakness could well raise additional concerns about how well the US economy is actually doing," Michael Hewson from CMC Markets wrote on Wednesday.
"A powerful expectation for stronger growth remains very much intact, and this is why neither the policy bias at the Fed nor the level of yields has changed since the last FOMC meeting on March 18," Eric Green, head of US Rates & Economic Research at TD Securities, wrote on Wednesday.
"We do not expect any specific forward guidance on the timing of the lift-off but September remains our base-case. That view is dependent on stronger pace of economic activity in Q2 which we expect to be spurred by a rebound in consumer spending," BNP Paribas wrote on Wednesday in regard to the FOMC statement.
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GBP/USD could lose ground in May – ANZ
It’s not only the elections that could make a mess out of cable, but also seasonality. The US dollar has a tendency to rise in May while GBP has a tendency to slide during this month.
The team at ANZ examines seasonality for various currencies:
Here is their view :
“Our seasonality analysis shows that the month of May has tended to favour the USD generally with the DXY up in 9 out of the last 15 years for an average return of +0.5%.
Amongst the G10, GBP shows the greatest tendency to depreciate against the USD (11 out of the last 15 years), though the average percent spot move shorting GBP is only 0.5%.
The upcoming UK elections on 7 May might exacerbate this seasonality move. During the last two elections in May 2005 and 2010, the GBP depreciated by 4.8%. If history is any guide, the GBP could be in for a big fall.
Among the Asian currencies, ignoring the pegged currencies of VND and HKD, we find that INR shows a strong tendency to depreciate against the USD. USD/INR has risen in 11 out of the last 15 years for an average gain of 1.4%. We believe this effect is due to May typically having the most number of auspicious days for Indian weddings, which results in a rise in gold demand and other associated spending.
We note that INR weakness is even more pronounced against CAD, with CAD/INR rising in 13 out of the 15 years with an average gain of 2.1%. CAD also performs strongly against the AUD, with CAD/AUD rising 13 times in the last 15 years for an average spot gain of 1.7%. THB/JPY has a tendency to fall in the month as well.”
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GBP/USD: Sterling Retreats to $1.53 Area, UK Data Eyed
With most of Europe closed for the May Day holiday, the main focus today will be on how much of a good start the second quarter of this year has got off to in the UK and US after this week’s rather disappointing Q1 GDP numbers from both countries.
GBP/USD retreated from its 2-month high just below $1.55 seen in the previous sessions to the $1.53 area, primarily due to solid US jobless claims which supported the greenback.
Sterling continues to trade in a narrow range ahead of the opening bell, being virtually flat at $1.5348.
UK traders will focus on April's manufacturing PMI, as well as the latest lending and money supply data for March. Despite the rather disappointing Q1 GDP number earlier this week, the manufacturing sector has rebounded in recent months with a strong performance in March and this is expected to continue in April with a rise from 54.4 to 54.6.
The latest lending data is also expected to see an improvement, with net consumer credit expected to rise to £0.8 billion from £0.7 billion, and mortgage approvals expected to rise from 61.8K to 62.4K, and the best number since September last year.
"A continued improvement here would certainly bode particularly well for the start of Q2, especially with all the uncertainty surrounding next week’s election," Michael Hewson from CMC Markets UK wrote on Friday.
US news was positive, with jobless claims the lowest in 15 years. Initial jobless claims across the country rose to a seasonally adjusted 262,000 in the week ended April 25, the Department of Labor said in a weekly update on Thursday. The previous seven-day period showed the reading at a revised 296,000.
"The sharp improvement in weekly jobless claims to a fifteen year low, tied in with the FOMC pulling up the shutters on further guidance has put US markets on edge. US investors are now flying blind with respect to a potential rate rise at a time when the US economy continues to give mixed signals about its overall health. Muddying the waters further, the latest PCE inflation number, which the Fed uses as a inflation targeting measure saw a fall to 1.3%, from 1.4%," Hewson added.
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UK consumer credit booms in March, business lending jumps too
Lending to British consumers jumped in March by its biggest amount since before the financial crisis and business borrowing showed its strongest rise in at least four years, the Bank of England said on Friday.
The figures, which come less than a week before a national election, suggest underlying strength in the British economy despite some recent weak data.
The BoE also said mortgage approvals inched down after rising for three straight months.
The BoE said consumer credit grew by 1.24 billion pounds in March, higher than a forecast of 800 million pounds in a Reuters poll of economists.
That was the biggest monthly increase since February 2008 and compared with the same month last year, the increase was the biggest in nearly nine years.
Despite only weak rises in wages for much of the past five years, Britain's economic recovery has become increasingly reliant on spending by households.
A nascent recovery in earnings and zero inflation have helped boost confidence among consumers, although that has not translated into a clear lead in opinion polls for Prime Minister David Cameron's Conservative Party ahead of the May 7 election.
There was also a big jump in lending to business in March which was up by 2.72 billion pounds, the largest monthly increase since records began in mid-2011, the BoE.
The lending figures have been erratic and on year-on-year terms, lending to businesses in March was 0.5 percent lower.
Mortgage approvals for house purchases numbered 61,341 in March, down a touch from 61,523 in February.
Analysts in the Reuters poll had forecast 62,400 mortgage approvals were made in March.
The number of approvals fell in most months last year, when tighter lending rules were introduced, cooling house price growth and easing concerns about a bubble in the housing market.
Net mortgage lending, which lags approvals, rose by 1.83 billion pounds, in line with forecasts.
There have been recent signs that Britain's housing market will regain strength this year. Mortgage lender Nationwide said house prices rose in April at the fastest monthly pace since last June, while the British Bankers' Association has reported rising mortgage approvals in recent months.
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