GBPUSD news - page 103
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GBP/USD forecast for the week of September 26, 2016
The GBP/USD pair initially tried to rally during the course of the week, but then turned around to form a shooting star. With this, the 1.2850 level below is a supportive barrier, so we will have to break down below there before we start selling from a longer-term perspective as far as I can see. At that point in time, the market should then reach towards the 1.25 level, as it is a large, round, psychologically important level. Rallies at this point in time should be selling opportunities eventually, so I would wait for exhaustion myself.
GBP/USD Weekly Forecast September 26-30
The British Pound traded heavy in the past week, and GBP/USD was unable to move higher despite weakness seen in the Greenback as a result of the FOMC meeting on Wednesday. Among the majors, the Sterling and Kiwi Dollar were the only currencies unable to gain against the Dollar for the week.
The market-moving event for the week was the Fed meeting, and a slightly dovish slant in the monetary statement triggered a decline in the Dollar. The main takeaway was that the Fed saw the case for a rate hike strengthening, as indicated before, but chose to wait for further data to confirm that the economy is moving towards objectives. With employment levels continuing to display improvements, the focus was on inflation, and the latest PCE price index figures scheduled in the upcoming week will be important.
A decline in the Dollar triggered volatility across the majors, and GBP/USD was seen recovering from a rising trendline that connects early July lows with mid-August lows. The pair managed to reach prior horizontal support at 1.3081 but failed to scale above the level on Thursday. The Pound showed some resiliency as the exchange rate remained near the level despite a sharp reversal in the Dollar, but eventually turned lower to post a fresh low for the week on Friday. To end off the week, the pair is seen once again bouncing from the rising trendline.
Data out of the United Kingdom indicated a rebound in housing prices. The latest Rightmove house price index figures indicated a rise of 0.7% against a drop of 1.2% in the prior reading. While the data largely failed to move the exchange rate, it is one more data release that suggests that Brexit fears may have been exaggerated as there remains a significant amount of time for the EU divorce to finalize. A quarterly bulletin from the BoE was largely focused on the Fed, and the potential of a rate hike in the United States in the near-term. The bulletin also highlighted important developments in the markets post-Brexit. A speech from MPC member Forbes on Thursday provided an outlook on the UK following Brexit, with the main takeaway that Forbes believed further easing from the bank was not required. The speech kept the British Pound bid, but gains were not sustained, as the decline on Friday served to erase losses from the prior two days.
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UK BBA August mortgage approvals 26 Sept 2016
Lowest mortgage approvals rate since Jan 2015 and backing up softer house price data of late.
UK press: BoE Gov Carney says "positive long-term prospects for the UK economy"
Bank of England Governor Carney in the Scottish press (The Herald)
UK Net Consumer Lending Rises £4.5 Billion for August
According to the latest Bank of England data, overall lending to individuals increased by £4.5bn in August from £3.8bn for July and was stronger than the expected £4.0bn for the month.
The annual growth rate was unchanged at 4.0% and the data continues to suggest consumer borrowing held firm after the EU referendum.
Lending secured on dwellings increased by £2.9bn for the month from £2.6bn previously, while consumer credit increased by £1.6bn from £1.2bn previously. The annual increase in consumer credit strengthened to 10.3% from 10.1% the previous month, although there was a slight slowdown in the rate of credit-card growth.
There was a slowdown in the number of mortgage approvals for house purchases to 60,058 for August from 60,925 the previous month and there was also a significant drop in remortgaging activity. The overall figure for mortgage approvals was down close to 10% on the six-month average.
The data will reinforce the current consensus that consumer borrowing has not been influenced significantly by the EU referendum and this should support near-term growth in consumer spending with near-term unemployment changes pivotal for confidence. The data also reinforces expectations of an underlying slowdown in the housing sector, although this is related in part to strong growth early in 2016 ahead of tax changes.
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UK (Sept.) data: GfK consumer sentiment -1 (expected -5) + more
GfK consumer confidence (September) -1, biggest increase since June of 2015
GBP/USD Weekly Forecast October 3-7
GBP/USD attempted to stage a recovery in the past week but was unable to gain momentum to the upside. A weekly high was posted early in the day on Thursday, and the subsequent decline erased the bulk of the early week gains. A doji has printed on the weekly chart, neutralizing some of the bearish momentum from the prior three weeks, and bulls will want to see a push higher this week, as the pair remains at risk of a technical breakdown.
A rising trendline connecting the early July low with mid-August lows has been holding the pair higher, but not with much conviction. The pair tested the lower bound several times this week, but the lack of a notable bounce from the level should be a cause for concern for GBP/USD bulls.
September 2016 UK Markit/CIPS manufacturing PMI 55.4 vs 52.1 exp
Details of the September 2016 UK Markit/CIPS manufacturing PMI report 3 October 2016
September UK Manufacturing PMI Strengthens Further to 27-Month High
After a strong rebound in the August data, there was a further improvement in the UK manufacturing PMI index for September. From 53.3 the previous month, the index strengthened to 55.4, which was the highest reading since June 2014 and well above consensus expectations of a retreat to around 52.2.
The third quarter as a whole was also the strongest of 2016 despite the very sharp decline recorded for July. There will be increased doubts whether further monetary easing is justified, although Wednesday’s services-sector data will be crucial.
Production increased to the highest level since May 2014 and the increase in orders was also the second strongest since the middle of 2014. The increase in export orders was at the fastest pace since January 2014 with strength in most overseas markets.
There was an increase in employment for the second successive month, supported in part by capacity constraints. There was additional evidence of constraints with the steepest strengthening in supplier lead times since May 2011.
There was a further sharp increase in input prices on the month with an annual gain above 10%, while output prices also continued to increase at a faster than average pace.
Despite short-term optimism, there will be further underlying fears surrounding capacity constraints within manufacturing, which will limit growth. Nevertheless, if there are also robust readings for the construction and services sectors over the next two days, there will be a much reduced chance of further Bank of England monetary easing in November.
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