GBPUSD news - page 59
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UK mortgage approvals June 66,582 vs 66k exp
Latest lending data just out
GBPUSD Rejects Daily Resistance Level – Bearish Reversal Candle
GBPUSD has been stuck in this holding pattern under a stubborn resistance level on the daily chary, which has been containing price for the past couple of weeks.
Again, the market moved up into this resistance level and the higher prices were denied, and pushed back lower to create a bearish rejection candle in response to the Fed’s FOMC release.
I am not sure what the Fed’s position was, but we can see the GBPUSD responded bearishly with the increase in USD strength. If the market breaks lower, we could see a breakout to the downside and a move into lower prices.
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GBP/USD: Sterling Struggles to Hold Above $1.5600, Sells on Rallies
With the Bank of England (BoE) interest rate decision and its quarterly macroeconomic projections in the Inflation Report approaching next week, sterling falls short of withholding gains on the last day of July.
The UK pound was seen down 0.20% on Friday trading at $1.556 against the US dollar as lack of macro data and broadly based dollar strength ruled the market at the week's close.
The Bank of England is set to convene on interest rates on Thursday next week (August 6th) and for the first time it will publish Monetary Policy Committee (MPC) minutes and the Inflation Report all at the same time. Although no change in the interest rates is expected, given the recent verbal hawkishness from the MPC members, including David Miles and BoE's governor Mark Carney, sterling is likely to be boosted should the inflation forecast be accompanied by a solid wage growth forecast, justifying monetary tightening.
"The GBP will likely strengthen against its peers as the Bank of England leads monetary normalization in Europe," analysts from Scotia bank noted on Friday.
Although the UK is seen as leader in monetary policy normalization in Europe with the economic growth rate accompanied by solid employment and wage growth pick up, the central market projection is set for a February lift-off. With the interest rate increases seen gradual and limited, the interest rate differential beneficial for sterling versus non-US currencies long-term.
GBP/USD forecast for the week of August 3, 2015
The GBP/USD pair broke higher during the course of the week, using the 1.55 level as support. With that being the case, the market should then head towards the 1.58 level given enough time. On top of that, there is an uptrend line below that should continue to pushes market higher, so having said that we have no interest in selling this market. If we can get above the 1.58 level though, this market should continue to go to the 1.60 level. We have no interest in selling as long as we can stay above that uptrend line.
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GBP/USD weekly outlook: August 3 - 7
The pound moved higher against the dollar on Friday after data showing that U.S. wage growth stagnated in the second quarter prompted investors to push back expectations on the timing of a U.S. rate hike.
The Department of Labor reported that the U.S. employment-cost index, a measure of workers’ wages and benefits, rose just 0.2% in the second quarter. It was the smallest quarterly increase since records began in 1982 and was well below economists’ expectations of a 0.6% increase.
The unexpectedly weak data tempered expectations for a rate hike in the coming months.
GBP/USD hit highs of 1.5678 immediately following the report, before falling back to 1.5627 in late trade, up 0.17% for the day. For the month, the pair gained 0.37%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, settled at 0.30% to 97.32 late Friday after falling as low as 96.38. The index still ended the month with gains of 1.86%.
The dollar had strengthened earlier in the week after the Federal Reserve indicated that interest rates could rise in the coming months, possibly as early as September, and after data showing U.S. economic growth accelerated in the second quarter.
The U.S. economy expanded at an annual rate of 2.3% in the three months to June the Commerce Department said Thursday. First quarter growth was revised up to 0.6% from a previously reported contraction of 0.2%.
Meanwhile, sterling was lower against the euro, with EUR/GBP up 0.31% to 0.7029 in late trade.
In the week ahead, investors will be turning their attention to the latest U.S. employment report, which could reinforce expectations for higher interest rates.
Market participants will also be looking ahead to Thursday, when the Bank of England will announce its latest interest rate decision; publish the minutes of the monetary policy meeting; and present the latest quarterly forecasts for economic growth and inflation.
The three events had been held separately previously.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
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July 2015 UK Markit CIPS manufacturing PMI 51.9 vs 51.6 exp
Details of the July 2015 UK Markit CIPS manufacturing PMI data report 3 August 2015
That halts the recent falls but we're far from the highs seen mid-2013. New orders fall to the lowest since Sep last year
GBP/USD: Cable Slightly in Red as Pound Fails to Hold Gains
The cable was seen almost flat on Tuesday, as the British pound several times today gave up its minor gains amid a data-quiet trading session in Europe and the US. Therefore, the pound stepped slightly below the one month resistance at $1.5650.
However, events coming later this week, specifically the Bank of England (BoE) inflation report and the BoE minutes on Thursday along with the US highlight, non-farm payrolls due on Friday, might bring additional market volatility, causing a significant move in either direction.
In the afternoon, the cable was trading with a minor loss of 0.10% at $1.5566, slipping from an intraday high at $1.5633, while most of the FX majors followed a similar trading pattern today as the US dollar index only moderately rose, adding 0.42% to 98.02 points.
Summer trading session
As for US updates, the Census Bureau published better-than-anticipated factory orders for June, reaching 1.8% after May's revised 1.1% fall. Otherwise, investors enjoyed a less hectic session ahead of the non-farm payrolls on Friday.
Meanwhile in the UK, construction firms' activity unexpectedly decelerated, shown by the Markit/CIPS headline PMI index ticking down to 57.1 in July, from a four-month high of 58.1 in June, and below the market estimate of 58.5. This was mainly due to weaker activity in the residential building sector, which was the second slowest since mid-2013, the report said.
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July 2015 UK Markit CIPS services PMI 57.4 vs 58.0
Details of the July 2015 UK services PMI data report 5 August 2015
Misses the beat but new orders saves it from being a bad report
Markit pins Q3 GDP at about 0.6% on this and the other UK PMI numbers. Employment falls to 53.8 vs 56.0 prior, lowest since March last year
GBPUSD perhaps surprisingly calm in the face of a worse number, particularly with the BOE tomorrow. We've been to 1.5580from 1.5610
In the report Markit note that financial services had their strongest month since 2013. Business services countered that with the weakest growth in 3 years
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GBP: What's So 'Super' About Thursday?
What Makes Thursday "Super" for GBP?
With less than 24 hours to go before 'Super Thursday', sterling traded strongly against all of the major currencies. For the first time ever, the Bank of England will simultaneously release its monetary policy decision, meeting minutes and the Quarterly Inflation Report. Independently each of these event risks have the power to trigger big moves in the currency but collectively we can be assured that Thursday will be a fun day for the British pound. We can't help but wonder if the timing of these releases, which will be followed by a press conference 45 minutes later from Mark Carney suggests that the central bank is at the cusp of a major change in monetary policy. What makes Thursday so super for the pound is that while no one expects the BoE to raise interest rates there could be a dramatic change in guidance. More specifically, we will be looking for 4 things:
#1 Number of Policymakers Voting in Favor of a Rate Hike - There could be up to 3 dissenters (Weale, McCafferty and Miles)
#2 Changes in BoE Forecasts - How Soon will they Reach 2% Inflation?
#3 Assessment of Slack - Wages and Productivity are on the Rise
#4 Carney's Outlook - He's Generally more Hawkish than his Peers
Investors are clearly bracing for a positive outcome and we agree that the Bank of England will start to prepare the market for tightening. However the point of Super Thursday is to increase transparency and not signal major changes in monetary policy. Since the last meeting we saw a pickup in manufacturing activity but service and construction activity slowed. Consumer confidence also declined as retail sales dropped and jobless claims increased. Inflation remains extremely low with year-over-year CPI sitting at 0% and core YoY CPI at 0.8%. So while the general outlook for the U.K. economy is improving and more U.K. policymakers are warming to the idea of raising rates, the data does not scream the need for tightening. So if the BoE remains elusive, we could see a sharp correction in the pound that could push GBP/USD to 1.55. However if the central bank looks beyond these reports and focuses on the decline in slack and rise in inflation expectations with at least one member of the Monetary Policy Committee voting for a rate hike, sterling will extend its gains against all major currencies.
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MPC Preview: Essentials of the BoE's 'Heavy Thursday'
The nine-strong rate-setting committee is expected to keep monetary policy stance unchanged in August, but economists expect a rift around the outlook for inflation. Two policymakers, Martin Weale and Ian McCafferty, could possibly vote for a rate hike as early as in August. Both policymakers were voting for a 25 basis point rate increase already last year, between August and December 2014, before they dropped their vote in January, when inflation was falling sharply towards zero.
Also, David Miles is possibly joining the minority at the Monetary Policy Committee (MPC) as his most recent comments showed that for the first time in his six-year term at the MPC, ending this August, of a willingness to vote in favor of an interest rate increase.
Even though the UK economy picked up pace notably in the second quarter, the overall macro environment in which the Bank of England is about to publish its new forecasts, and decide on the path of monetary policy, has become more complicated and complex. While the Greek crisis has been tamed for the time being, other headwinds from across the world continue to weigh on the outlook.
External downward price pressures, making up nearly three quarters of the downward CPI deviation, keep the UK consumer inflation significantly low, while a tentative uptick in domestic upward pressures in the form of wage growth suggest a healthy offsetting factor.
Global oil prices continue to hover within a bearish zone and close to this year's lows, while sterling remains on a strong footing, rising some 10.3% since the start of the year against the eurozone currency – the UK's largest trading partner.
Both of these factors are expected to continue exerting significant downward pressure on the CPI inflation outlook. The August Inflation Report forecast should shed more light on how much weight and persistence the policymakers attribute to those pressures, and how much it affects their medium-term outlook for inflation.
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