GBPUSD news - page 61
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UK Preview: Falling Prices Set to Boost Shoppers' Appetite
The median estimate suggests UK CPI inflation remained unchanged at 0% in July. The core CPI, a less volatile gauge stripped of energy and food prices, is estimated to have stayed at 0.8% - the lowest level in fourteen years. The UK's Office for National Statistics (ONS) is releasing July figures on Tuesday next week.
Despite expectations pointing to no change in inflation, notable falls in oil and petrol prices in July this year, compared with the same month a year ago, suggest inflation may have slipped back below zero again.
According to the AA Fuel Report, the UK national average price of unleaded petrol in July this year was as much as 11% below the average petrol price back in July 2014. And the fact that transport costs in July last year were the main upward driver to the annual CPI change, we can expect marked downward pressure from this segment on this year's July inflation rate.
The price of Brent crude fell between June and July this year by 6.3%, and was a massive 40% below the level seen in July last year. The Bank of England (BoE) reiterated in its August forecast that as much as three quarters of downward deviation of CPI inflation from the 2% target has come from volatile prices of energy and food. Those external factors have been keeping the overall CPI below the target since December 2013.
The BoE consequently struck a more dovish tone reflected in its August Inflation Report, revising down the near-term inflation outlook on the back of strong downward external pressures stemming from weak oil prices and sterling appreciation.
"In light of the reduction in oil prices and appreciation of sterling over the past three months, it appeared that the increase in inflation over the following year would be more gradual than had previously been supposed," the BoE's Monetary Policy Committee (MPC) minutes read in August.
Relative to the May Inflation Report, the short-term inflation forecast was lowered almost by half to project an inflation rate of 0.3% on a median basis by the end of 2015, then rising slightly to 1.5% at the end of 2016, reaching the 2% target in the third quarter of 2017, should the bank rate follow the gently rising path implied by market yields. The lower near-term inflation outlook implies gradual interest rate increases, confirming current market expectations of a February lift-off, but with the risk of a delay to May remaining plausible.
Shop price deflation, as measured by the British Retail Consortium (BRC), also adds to this downward trend. In its July survey, the BRC estimated the overall shop price deflation fell further down to 1.4% in July, lower than the 1.3% fall in June.
source
'No-flation' in the UK reduces the likelihood of a BoE rate hike
From the UK Telegraph over the weekend:
BOE's Forbes comments on UK interest rates, need hike 'well before' inflation hits target
Comments from Bank of England's Kristen Forbes via Reuters:
Reuters with the headlines, nothing further at this stage
More here at the UK Telegraph, in a piece written by Forbes:
-
Kristin Forbes is an economist. She is an external member of the Monetary Policy Committee of the Bank of England.
GBP/USD: Sterling Little Changed Ahead of UK CPI
Ahead of the busy UK data session on Tuesday, sterling was seen flat, unable to surpass the $1.56 handle.
Today's UK CPI data for July is not expected to show any significant rise in price pressures given the sharp falls in commodity prices last month, with WTI oil prices currently trading at six-year lows.
The monthly CPI number should show a decline of about 0.3%, while year-on-year the number is expected to remain unchanged at 0%.
"Though it wouldn’t be a big surprise if we slipped into negative territory here (annual figure) again as well," Michael Hewson from CMC Markets UK commented on Tuesday.
The pound remains trading in a tight range this morning, virtually flat at $1.5580 ahead of European open.
Strong external lowflationary forces are somewhat being offset by domestically-generated inflationary pressures, such as wages.
According to the latest labor market data, regular wages - those showing a more underlying growth stripped of volatile bonus payments - continued to increase by 2.8% over the quarter to June, which was the highest rate of growth since 2009.
For now, record-low inflation, combined with rising wages, offers higher real income to households, who in turn feel less pressure on their budgets after years of above-target inflation and low wages. But the risk that inflation overshoots the target again remains highly possible if the Bank of England continues to sit on rates for longer than necessary.
source
GBP/USD: Sterling Elevated by BoE Rate Hike Speculation
Upbeat Core UK Inflation figures pushed sterling above $1.57 in the previous session, before paring its gains slightly. On Wednesday sterling moved higher again ahead of a day that will see the focus almost entirely on US proceedings.
Core CPI picked up to 1.2% in July, up from a fourteen-year low of 0.8% in June, and 0.3 percentage points above the market estimates.
Sterling consequently surged, driven by expectations that the time of the first hike in the Bank of England's (BoE) base rate is coming closer. Signs of a rise in domestic inflation should also reinforce inflation hawks at the BoE's nine-strong rate-setting committee, who have been arguing that a strong labor market and rising wages should continue to add pressure on inflation.
On Wednesday sterling continued to add gains, trading at a session high of $1.5674, up 0.12% on the day around the European open.
Markets will be watching closely US session which offers the latest US CPI numbers for July as well as the Federal Open Market Committee (FOMC) minutes, with both expected to support the USD.
"If the latest US CPI numbers for July, also surprise by coming out a little stronger than expected we could well see a similar jump in the US dollar, though given some of the recent weakness in commodity prices in the last month, an upside surprise would be unexpected," Michael Hewson from CMC Markets UK wrote on Wednesday.
Wall Street economists are projecting the CPI to edge 0.2% higher in July from a month earlier. A less volatile "core" component of the indicator is expected to rise at a similar pace.
source
UK retail sales July mm +0.1% vs +0.4% exp
Latest UK retails data now out
Softer headline but better revisions and core helping to temper GBP falls
Cable had a quick look at the 1.5635 area highlighted in my preview but now 1.5652
EURGBP 0.7105 from 0.7118 just ahead of the 0.7120 first res/offers also highlighted here
GBP/USD forecast for the week of August 24, 2015
The GBP/USD pair initially fell during the course the week but found enough support below to turn things back around and form a hammer. With that being the case, the hammer looks as if it is telling us that the markets going to try to reach towards the 1.58 level, and then ultimately the 1.60 level. We have no interest whatsoever in selling this pair, and believe that any pullback and we get at this point in time will end up being a buying opportunity given enough time.
GBP/USD weekly outlook: August 24 - 28
The pound ended the week near seven-week highs against the broadly weaker dollar on Friday as concerns that slowing global growth could delay a U.S. rate hike pressured the greenback lower across the board.
GBP/USD hit highs of 1.5722, the most since July 1 and was last at 1.5691, little changed for the day.
The dollar fell more than 1% against the euro and the yen on Friday as weak factory data from China added to concerns over slowing global growth and reinforced expectations that the Federal Reserve may delay hiking interest rates.
Manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, a report showed, exacerbating fears over a slowdown in the world’s second-largest economy.
Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.
Wednesday’s minutes of the Federal Reserve’s July meeting indicated that there was little consensuses on when to start raising interest rates, prompting investors to push back expectations for a rate hike.
Fed officials believe the economy is nearing the point where interest rates should move higher, but noted that the subdued U.S. inflation outlook inflation and weakness in the global economy could still pose risks to the U.S. economic outlook.
Demand for sterling continued to be underpinned after an uptick in inflation and comments by outgoing Bank of England policymaker David Miles who said Tuesday that a rate hike is coming "pretty soon" boosted expectations for higher interest rates.
But the pound was sharply lower against the stronger euro, with EUR/GBP jumping 1.29% to 0.7255.
The single currency received an additional boost after data showed that euro zone private sector growth unexpectedly accelerated this month as new orders rose.
The preliminary reading of the euro area’s composite index, which covers both the manufacturing and service sectors, rose to 54.1 this month from July's 53.9. Economists had expected the index to tick down to 53.8.
The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.97% to a five-week low of 94.84.
In recent months the dollar had been boosted by expectations that the improving U.S. economy would prompt the Fed to raise borrowing costs as soon as September.
In the week ahead, investors will be looking ahead to Wednesday’s data on U.S. durable goods orders for a fresh reading on the strength of the economy. A speech on Monday by Atlanta Fed President Dennis Lockhart will also be closely watched.
Revised data from both the U.S. and the U.K. on second quarter growth will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
read more
GBP/USD weekly outlook: August 24 - 28
The pound ended the week near seven-week highs against the broadly weaker dollar on Friday as concerns that slowing global growth could delay a U.S. rate hike pressured the greenback lower across the board.
GBP/USD hit highs of 1.5722, the most since July 1 and was last at 1.5691, little changed for the day.
The dollar fell more than 1% against the euro and the yen on Friday as weak factory data from China added to concerns over slowing global growth and reinforced expectations that the Federal Reserve may delay hiking interest rates.
Manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, a report showed, exacerbating fears over a slowdown in the world’s second-largest economy.
Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.
Wednesday’s minutes of the Federal Reserve’s July meeting indicated that there was little consensuses on when to start raising interest rates, prompting investors to push back expectations for a rate hike.
Fed officials believe the economy is nearing the point where interest rates should move higher, but noted that the subdued U.S. inflation outlook inflation and weakness in the global economy could still pose risks to the U.S. economic outlook.
Demand for sterling continued to be underpinned after an uptick in inflation and comments by outgoing Bank of England policymaker David Miles who said Tuesday that a rate hike is coming "pretty soon" boosted expectations for higher interest rates.
But the pound was sharply lower against the stronger euro, with EUR/GBP jumping 1.29% to 0.7255.
The single currency received an additional boost after data showed that euro zone private sector growth unexpectedly accelerated this month as new orders rose.
The preliminary reading of the euro area’s composite index, which covers both the manufacturing and service sectors, rose to 54.1 this month from July's 53.9. Economists had expected the index to tick down to 53.8.
The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.97% to a five-week low of 94.84.
read more
UK public sector net borrowing excluding bank interventions moved into a surplus in July of £1.3 billion, which is the first July surplus since the same month in 2012 and a marked improvement from a deficit of £9.4 billion in June this year, the Office for National Statistics (ONS) informed on Friday.
The overall borrowing over the current fiscal year between April and July decreased by as much as 23.3%, from £31.4 billion measured during the same period last year, down to £24 billion this year.
Public coffers have seen notable improvements so far this year as the economy maintains its healthy pace and the labor market has been improving sharply in recent quarters.
In July, the primary boost to the UK public finances came from a marked rise in corporation tax receipts, increasing 5.2% over the year to July and as much as 9.5% so far this fiscal year, when compared with the same period last year. Both income tax and VAT receipts rose as well in July, rising 3.3% and 5.3% respectively. The decrease in borrowing in July was also due to a fall of £8.1 billion in central government net borrowing.
The public sector net debt at the end of July was £1.5 trillion, equivalent of 80.8% of the total GDP, and an increase by £73.4 billion compared with same month a year ago.
Today's data also showed that a European Commission (EC) demand for £2.9 billion from retrospective adjustment to the EC budget for the UK meant an initial payment of £0.4 billion was made to the EC in July.
In his 'summer budget' speech he gave on July 8, Chancellor George Osborne said the government planned to reduce public sector net borrowing to £69.5 billion in the current fiscal year. The reduction should then continue further to £43.1 billion in fiscal year 2016-17; £23.3 billion in 2017-18, until it reaches £6.4 billion in fiscal year to April 2019.
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