GBPUSD news - page 112

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UK data - Rightmove House Prices for December: -2.1% m/m (prior -1.1%)


Rightmove house prices for the UK

-2.1% m/m
  • prior -1.1%
+3.4% y/y
  • prior +4.5%
--
Also (summarised, in brief, from Reuters):
  • The British Chambers of Commerce has bumped its forecast for economic growth next year a little higher. To 1.1% for 2017 (from 1% it expected previously)
  • On the other hand, its downgraded the outlook for 2018 (citing inflation pressures & ongoing Brexit uncertainty) (to 1.4% from 1.8)
  • Expects current economic momentum to slow over the next two years
  • Weaker economic activity and an erosion of real wage growth triggered by sterling's post-referendum slide is expected to curb household consumption and business investment
  • Inflation ... BCC forecast of 2.1 percent in 2017 and 2.4 percent in 2018 - both above the BoE 2$ target
  • Expects business investment to fall by 0.8 percent in 2016, 2.1 percent in 2017 and 0.3 percent in 2018
 

UK October Leading Indicators Increase 0.1%


The Conference Board index of UK leading indicators rose 0.1% for October following a revised reading of unchanged for September, which was originally reported as a 0.1% increase.

The coincident indicator increased 0.2% for the month.

The previous increase in leading indicators was registered for the February data with three readings of unchanged and a run of four successive monthly declines from May.

This run of data pulled the leading index significantly lower, although the pace was much shallower than seen in the previous downturn, which started in 2007.

An important difference in this economic cycle has been the weakness in Sterling, which has supported leading indicators through a boost to new orders, especially in the manufacturing sector. Sterling weakness has also helped underpin equity markets, while consumer confidence has held firm despite a small monthly decline in the latest data. A steeper yield curve should provide net support to leading indicators.

The small increase in leading indicators for October will also help underpin confidence in the outlook and there will be expectations of further modest economic expansion in the short term. The overall rate of expansion suggests the economy still faces important headwinds with relatively weak growth likely.

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UK CPI Nov mm +0.2% vs +0.2% exp


UK November inflation report 13 Dec

  • +0.1% prev
  • yy +1.2% vs 1.1% exp vs +0.9% prev
  • Core CPI yy  +1.4% vs +1.3% exp vs +1.2% prev
  • RPI mm +0.3% vs +0.2% exp vs 0.0% prev
  • yy 2.2% vs 2.1% exp vs 2.0% prev
  • RPI 265.5vs 265.4 exp vs 264.8 prev
  • RPI ex-mortgage yy 2.5% vs 2.3% ex vs 2.25 prev
  • PPI input mm NSA -1.1% vs -0.5% exp vs +4.5% prev revised down from 4.6%
  • yy NSA 12.9% vs 13.5% exp vs 12.4% prev rev up from 12.2%
  • PPI output mm NSA 0.0% vs 0.2% exp vs +0.7% prev rev up from +0.6%
  • yy NSA 2.3% vs 2.5% exp vs 2.1% prev
  • PPI output core mm NSA 0.0% vs 0.2% exp vs 0.5% prev rev up from 0.4%
  • yy NSA 2.2% vs 2.3% exp vs +2.0% prev rev up from 1.9%
  • HPI yy 6.9% vs 7.3% exp vs 7.0% prev rev down from 7.7%
 

GBP: BoE Won't Meaningfully Shift The Dial For GBP


We expect no change in Bank of England (BoE) policy this week. We also drop our forecast for a rate cut and QE extension in February. Resilient official growth makes stimulus harder to justify and QE seems politically unacceptable now.

We still think the outlook warrants further easing, however, and therefore expect the BoE to return to the table later in 2017. The monetary stimulus in the system has been fading (Chart of the Day). True, GDP forecasts have been improving and real gilt rates remain lower than May. But, the former is mainly due to base effects from 2016 rather than the outlook while longer-term household real rates have fallen little. We look for another rate cut to 10bp in August rather than our previous call of February.

 
Pound falls again as MPC say they're ready to act in either direction


GBPUSD down to 1.2453  and now 1.2466 after posting 1.2495 after the announcement.

EURGBP 0.8356 from 0.8330 lows as the GBPEUR 1.2000 psychological level holds.

Some traders/robots disappointed that the very minimal chance of a hike has not materialized and the passage in the statement that says:

"Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target"

  • better global outlook counterbalanced by greater risks
  • month to month volatility likely as market views on UK-EU relationship evolve
 
GBP has recovered recently but I can't see it going anywhere but down. Recent economic data has been good but at some point it will turn downwards and when it does GBP will fall like a stone again
 

December 2016 UK CBI industrial trends orders 0 vs -5 exp


Details of the December 2016 UK CBI industrial trends orders 16 December 2016

  • Prior -3

Despite the reading of zero, it's the highest level in 20 months. Selling prices are also showing inflationary pressure

 

GBP/USD Rebounding, Meets Resistance


GBP/USD has gained ground in today’s trading, with the pair trading at 1.2479, up 0.51%, heading into the weekend. The high for the session stands at 1.2510, which represents a test of former support at the 1.2500 level. Maintaining below 1.2500 would keep the broader bias for GBP/USD firmly to the downside.

On a renewed decline next week, the next level of support below Thursday’s 1.2375 low is at the November 18th 1.2300 low, which represents a test of the upper boundary of the trading range which encompassed price action following the October 7th flash crash in the sterling. A drop below 1.2300 would leave the target near the 1.2100 level.

With oversold conditions a factor, a continued period of consolidation could play out early in next week’s trading. However, at present, 1.2500 is expected to maintain a lid on price action, given the resilience exhibited by the dollar. The dollar is currently holding near 102.86, down 0.23% from Thursday’s North American close, a minimal pullback considered the extent of DXY’s overbought condition.

Should GBP/USD extend the recent advance and move above the 1.2500 level, the next level of resistance comes into play at the recently broken up trendline shown on the weekly chart. This trendline comes in near the 1.2600 level.

 

GBP/USD Weekly Forecast December 19-23


GBP/USD lost 0.66% in last week’s trading following interest rate decisions by both the Federal Reserve and Bank of England. The Federal Reserve increased the Federal Funds target range by 0.25% to 0.50-0.75%. This was expected by the market and the first increase since December 2015.

There was an upward projection to the median Federal Funds rate for 2017 to 1.4%, from the 1.1% seen at the September meeting with the 2018 rate increased to 2.1% from 1.9%. There was, however, a narrowing of the central tendency for 2017 to 1.1-1.6% from 1.1-1.8%. Eleven of the FOMC participants expect to see at least 3 rate increases for 2017, with four expecting to see 2 rate increases next year while two members saw 1 hike for the year.

The dollar soared on the news, resulting in a sharp drop in GBP/USD. Little relief from the weakness occurred following the Bank of England’s rate decision on Thursday. The Bank of England Monetary Policy Committee left interest rates on hold at 0.25%, which was in line with market expectations. There was a 9-0 vote for the decision and there was also a 9-0 vote for leaving total planned government bond purchases at £435bn. The Bank of England’s outlook remains cautious.

U.K. data last week was mostly better than expected with retail sales rising strongly, wage growth accelerating and core CPI increasing. However, dollar strength prevailed and a low for the week was established in GBP/USD at 1.2375 on Thursday, the lowest level traded since November 23rd. The decline broke support at the 1.2500 level. A relief rally, however, did develop on Friday, bringing former this support back into play as resistance, with the pair ending the week at 1.2488.

Sterling firmed on Friday on hopes for a transitional Brexit period that will bridge the country’s move out of the European Union. Both the House of Lords and a senior Government member made calls for an interim deal that would see the UK remain a member of the single market until such a time as Brexit has been negotiated. There is a growing consensus that the two years that follow the triggering of Article 50 are simply not long enough to arrive at credible deal.

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GBP/USD: Pulling Back From Resistance


GBP/USD is meeting resistance at former support at the 1.2500 level, as the pair is down 0.23% at 1.2456 in today’s trading. The inability to move back above 1.2500 following Friday’s rebound is a sign of weakness.

On the downside, the target for GBP/USD at the November 18 low at the 1.2300 level. This low represents a test of the upper boundary of the trading range which encompassed price action following the October 7th flash crash in the sterling. A drop below 1.2300 would leave the target near the 1.2100 level, representing the lows established October 11 and 25.

No news is associated with today’s drop in the sterling. In last week’s trading, GBP/USD lost 0.66% following interest rate decisions by both the Federal Reserve and Bank of England. The Federal Reserve increased the Federal Funds target range by 0.25% to 0.50-0.75%. This was expected by the market and the first increase since December 2015.

The dollar soared on the news, resulting in a sharp drop in GBP/USD. Little relief from the weakness occurred following the Bank of England’s rate decision on Thursday. The Bank of England Monetary Policy Committee left interest rates on hold at 0.25%, which was in line with market expectations.

Sterling firmed on Friday on hopes for a transitional Brexit period that will bridge the country’s move out of the European Union. Both the House of Lords and a senior Government member made calls for an interim deal that would see the UK remain a member of the single market until such a time as Brexit has been negotiated. There is a growing consensus that the two years that follow the triggering of Article 50 are simply not long enough to arrive at credible deal.

read more

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