GBPUSD news - page 75
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GBP/USD: Sterling Enters Consolidation Phase After Hitting 8-Mth Low Sterling added light gains on Friday and was in correction mode after significant losses in the post-Federal Open Market Committee (FOMC) trading. The pound managed to bounce back from an eight-month low seen in the previous session, although the lack of data feed on the UK schedule left the GBP/USD at the mercy of broader market sentiment which is still being dominated by the greenback.
On Thursday the pound dived to the lowest point in eight months at $1.4866, before emerging above the $1.49 handle on Friday, trading 0.24% higher at $1.4936.
Even stellar UK retail sales data yesterday failed to provide the needed support for the British currency. Upbeat UK data suggests that UK consumers are feeling less constrained than was the case earlier this year.
"Certainly on-line Black Friday sales played their part, and with inflation still near zero and wages rising at 2% the December numbers could well be equally as positive," Michael Hewson from CMC Markets UK wrote on Friday.
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GBP/USD forecast for the week of December 21, 2015 The GBP/USD pair broke down significantly during the course of the week, and even made a fresh, new low at one point. We are well below the 1.50 level, so that of course is a psychologically significant move to the downside. We believe that a break below the bottom of the range for the course of the week should send this market looking towards the 1.46 handle, and perhaps even lower than that. Rallies at this point in time should be selling opportunities, as the 1.52 level is massively resistive.
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UK Press: BoE's Weale says need for tighter policy "slightly less immediate" The Bank of England's Martin Weale, reported in the UK's telegraph says
Has made the need for tighter policy "slightly less immediate".
Weale is considered one of the more 'hawkish' of the Monetary Policy Committee (MPC) members, a change in view from him to more dovish is significant and should weigh on GBP.
GBP/USD: Pound Reduces Bearish Momentum on Macro Void Sterling was trading in a relatively narrow range against the US dollar on Monday, having trouble to keep its marginal gains amid a light-data session which only saw a second tier sales update from the update Confederation of British Industry (CBI).
The quiet start to the week gave the pound a chance to catch its breath and at least diminish the significant bearish momentum which last week pushed cable to the lowest level since April at $1.4862. The pound fell over 300 hundred pips over the last five-day period as the buck hit several punches amid the first interest rate hike by the Federal Reserve (Fed) in a decade.
In the afternoon, the pound inched 0.02% higher to trade at $1.4889 against the greenback, falling from an intraday high of $1.4929 seen earlier in the morning, while the US dollar index gave up 0.24% to 98.47 points.
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Opinion: U.K. hopes to ease eurozone anxiety about possible breakup with EU Britain’s fluctuating relationship with the European Union has ended the year on a relatively positive note with the stage set for a referendum on U.K. membership in summer 2016. Yet David Cameron, the U.K. prime minister, who will be campaigning for a “Yes” vote to stay in, faces huge uncertainty whether the preliminary deal on renegotiating Britain’s EU ties will result in that outcome.
A key factor will be the technical-sounding issue of Britain’s link — as a long-term and probably permanent member of the noneuro group of nations — with the 19 countries making up the single European currency. One way forward would be to depoliticize the matter by making the International Monetary Fund the ring-holder in a new relationship between the pound and the euro GBPEUR, -0.0073% .
Appointing the Fund the guardian of the new link — suggested by Paul Goldschmidt, a former EU Commission director general, in a recent paper — could represent a breakthrough. Goldschmidt suggests bringing together governments and central bank governors representing the main reserve currencies to agree a set of rules prohibiting discriminatory practices that would harm national interests or the functioning of the foreign-exchange market.
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UK Q3 GDP final QQ +0.4% vs +0.5% exp
Final Q3 reading now out
Not good news for the GBP bulls and the pound is slipping albeit not tumbling. Better than exp c/a data helping to temper losses as is higher household disposable income
Re current account data the ONS says
The total trade deficit widened to £8.7 billion in Quarter 3 (July to September) 2015, from £4.7 billion in Quarter 2 (April to June) 2015. This was primarily due to a £5.4 billion widening in the trade in goods deficit partially offset by a £1.4 billion widening in the trade in services surplus.
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BoE 2016 Outlook: Weak Inflation Holds Back Return to Policy Normalization So far the outlook for UK economic growth remains solid although the latest data showed GDP growth was slower in both the second and third quarters of this year. The inflation outlook, however, remains subdued and uncertain.
The minutes from the December meeting of the Bank of England's (BoE) Monetary Policy Committee (MPC) showed that policymakers saw downside risks to inflation from protracted low oil prices, and weaker unit labor costs growth so far this year.
Even though crude prices remain low, its downward pressure on the CPI's annual change will be smoother early in 2016 than it was back in 2015, when prices fell much deeper from the preceding year – the so-called base effect. So we may see some gentle pick up in CPI early next year, all things being equal, and crude prices remain steady overall. Still, the BoE sees CPI below 1% until the second half of next year.
As regards monetary divergence, the US Federal Reserve (Fed) eventually ended the era of exotic policy in December. Much will now depend on how it proceeds with tightening cycles next year. Again, it all depends on the data.
The BoE said in December that it decides solely on the basis of the UK inflation outlook, and not on European Central Bank (ECB) or Fed decisions, but the fact the Fed moved off the extraordinary measures offers the BoE more comfort in following suit. But again, its all about the outlook for inflation and growth in UK.
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Pound to Dollar: Deutsche Predict GBP to Fall to 1.35-1.40 Exchange rate forecaster's at Deutsche bank see it as the pound's turn to weaken in 2016; whilst they revise up their EUR/USD outlook and discuss potential leading macro themes and their impact on FX.
Strategists at Deutsche have revised up their forecasts for the EUR/USD pair in 2016 based on concerns about a slow-down in China impacting on the Fed’s tightening trajectory:
“EUR/USD is now forecast at 0.95 at the end of 2016, up from our original 0.90 forecast, in recognition of: i) some prospective impact that risk factors like China will have in restraining Fed expectations holding back the USD versus the majors as described above; and, ii) EUR/USD is set to end 2015 slightly above our original projections, setting a higher EUR/USD starting point for future forecasts.”
Deutsche’s team go on to describe two different possible scenarios, the first in which macro themes are dominated by China’s slow-down, and the second in which they are dominated by Fed tightening:
“In macro terms, how 2016 shapes up will be heavily influenced by whether the main macro driver is the Fed or China.
“If Fed tightening is the driver, USD gains are seen as likely to be slow and broad-based, spread fairly evenly between G4 majors, commodity FX and EM FX.
If on the other hand, China, particularly China FX policy becomes a source of instability, USD gains will be heavily concentrated in commodity and EM FX, while the G4 majors all outperform.”
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Interesting move last week...
GBP/USD Forecast Dec. 28 – Jan. 1 GBP/USD Forecast Dec. 28 – Jan. 1
GBP/USD showed some downward movement but ended the week unchanged, closing at 1.4925. The final week of 2015 has just two events on the schedule. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.
In the US, Final GDP for the third quarter posted a gain of 2%, very close to the estimate. Housing numbers disappointed, and durable goods were weak, but within expectations.
Updates:
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