GBPUSD news - page 113
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December 2016 UK CBI distributive trade sales 35 vs 20 exp
Details from the December 2016 UK CBI distributive trade sales report 20 December 2016
GBP/USD Maintaining Downside Bias, Reaches Next Target
GBP/USD has declined to 1.2312 for a low in today’ trading, essentially reaching the next downside target at the 1.2300 level. With extreme oversold conditions a factor and support in play, a period of rebound or at least consolidation could develop over the near term. The pair is currently trading off the low of the session at 1.2330, down just over a half a percent from Monday’s North American close.
In today’s news, the latest UK CBI Distributive Trades Survey recorded a retail sales balance of +35% for December from a reading of 26% in November and compared with consensus expectations of a reading around 20%. This was the strongest reading since September 2015, maintaining evidence of strong short-term demand. A net balance of +21% also stated that sales volumes were above average for the time of the year. There was also a net positive balance of 12% reporting that they had placed higher orders with suppliers.
While sterling did recover some losses following the CBI retail survey, dollar strength continues to dominate and an eventual drop below 1.2300 by GBP/USD appears likely. 1.2300 is in the same vicinity as a 61.8% retracement of the advance from the October 25 low to the December 6 rally high. Thus, a drop below 1.2300 would increase the probabilities of a follow through decline to the 1.2100 level, representing the lows established October 11 and 25. Key support for GBP/USD is at the October 7 flash crash low at 1.1950.
In the US, there are no key economic releases on the calendar today. Existing home sales is due out tomorrow at 10:00am ET. On Thursday, Q3 GDP, jobless claims, durable orders, leading indicators, personal income/spending and the core PCE price index are on the calendar. The University of Michigan Consumer Sentiment Index and new home sales will be released on Friday.
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Citi/YouGov poll sees UK inflation expectations rise
Results of the monthly poll now out 21 Dec
Highest long-term reading since Sept 2014
Say Citi:
The 60 bps rise in long-term inflation expectations since July mirrors similar uptick in market based measure and is a sign of normalization, although it's unlikely to trigger BOE policy normalization due to the start of the Brexit process.
Not price moving info but one for general filing with UK inflation projected to head a lot higher next year.
November UK Public Sector Borrowing Requirement at £12.6 Billion, Underlying Concerns Persist
The UK public sector net borrowing requirement, excluding public-sector banks, declined to £12.6bn for November from £13.2bn the previous year and was above consensus expectations of a borrowing requirement of around £12.2bn for the month.
For the first eight months of fiscal 2016/17, the deficit declined to £59.5bn from £67.2bn the previous year.
Net debt amounted to £1,655.1bn and 84.5% of GDP from 84.4% in November 2015.
For the first eight months of the year, revenue rose 4.4% from the same 2015/16 period. Income tax receipts rose 2.1% with a 2.9% gain in VAT receipts and 9.7% gain in corporation taxes.
Overall spending was restrained with a 1.5% increase over the year as departmental spending remained under control.
Looking at November in isolation, there was an annual revenue increase of 3.6%, but there was a slowdown in income tax revenue growth to 1.1%.
There was also a slightly stronger increase in the rate of spending growth to 2.1%.
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UK data - GK consumer confidence (December): -7 (expected -8, prior -8)
UK data - Lloyds Business Barometer(December): 39 (prior 32)
Lloyds Business Barometer for December, 39
November was 32UK Final Q3 GDP Revised Up To 0.6%, Annual Growth Cut to 2.2%
The final reading for UK third-quarter GDP was revised up to 0.6% from the previous estimate of 0.5% and was above consensus expectations of a 0.5% quarterly advance.
The third-quarter release was revised up due to higher estimates of activity in the business services and finance industries.
There was, however, a small downward revision to estimates for both the first and second quarters and the annual growth estimate was, therefore revised down to 2.2% from 2.3%, which was below consensus forecasts of a 2.3% gain.
There were modest changes in the components with services the only sector to make an advance on the quarter. The increase for the latest three months was also revised up to 1.0% from 0.8% previously.
There was a small revision to the production estimate with output estimated to have declined 0.4% for the quarter from 0.5% previously with the construction decline revised to -0.8% from -1.0% previously.
The data will maintain expectations of firm short-term growth with growth in household spending the principal driving force.
There will still be concerns that growth will fade in 2017 as consumer spending is liable to slow under the weight of a slower growth in real incomes. The economy will, therefore, be more dependent on a rebound in manufacturing to make any significant headway.
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GBP/USD Forecast December 26, 2016
The GBP/JPY pair fell a bit during the day on Friday, as we tested the 1.22 handle. I believe that this market continues to get lower over the longer term, and short-term rallies that show signs of exhaustion will be nice selling opportunities. The British pound seems to be reaching towards the 1.21 handle again, and then after that the 1.20 level which is massively supportive. I am negative of this pair, but also recognize that we aren’t necessarily going to see some type of massive breakdown. I think a slow grind lower is what we can expect.
GBP/USD Weekly Forecast December 26-30
GBP/USD maintained a downside bias throughout last week’s trading, ending the week off 1.7% at 1.2276. The decline took out support at the 1.2300 level, which was in the same vicinity as a 61.8% retracement of the advance from the October 25 low to the December 6 rally high. Thus, the drop below 1.2300 increases the probabilities of a follow through decline to the 1.2100 level, representing the lows established October 11 and 25.
However, key support for GBP/USD is at the October 7 flash crash low at 1.1950. With dollar strength the overall dominant theme in the currency markets, at least a retest of the October low in GBP/USD is expected to play out in the weeks ahead. The dollar has been in a consolidation phase since mid-December. The lack of the development of any downside momentum despite the presence of a fully overbought condition is a sign of strength for the greenback.
In next week’s trading, the UK will be on holiday Monday and Tuesday and there are no major economic releases throughout the balance of the week.
In the US, the calendar is also light, with Consumer Confidence due out Tuesday, Pending Home Sales due Wednesday, Jobless Claims on Thursday and Chicago PMI on Friday. The US market is closed for the holiday on Monday.
Should GBP/USD make a move to the upside in what is expected to be a week of thin trading, important first resistance is at the 1.2500 level. A sustained move above 1.2500 is required to improve the outlook for GBP/USD. Given the resilience being displayed by the dollar and lack of upside momentum displayed by GBP/USD despite the presence of a fully oversold condition, a sustained move back above 1.2500 is not expected to play out.
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GBP/USD Consolidates Above Monthly Support Level
GBP/USD traded within a narrow range on Monday, as the bank holiday resulted in low volatility across most of the majors. The pair has held above support from the October close for a second consecutive session. With several of the majors signaling the potential of a countertrend correction, there is some potential for a broader recovery in GBP/USD from current support.
GBP/USD bounced from the October close at 1.2242 on Friday and has gained about 40 points thus far in the recovery. The pair has broken through several important levels as of late and near-term price action will be important for a clear directional bias.
The exchange rate broke below a rising trendline from late October lows shortly after the Fed meeting on November 14 to signal a turn lower. Following the break, the pair sliced through a horizontal level at 1.2502. The level was important in the second half of November, keeping the pair lower. Last week, the pair broke below support at 1.2318. The level had held the pair lower on two occasions in October and provided support in late November. The level will be important in the current recovery and is likely to hold sellers. A break of the level, however, could signal a turn in trend for a broader recovery.
The US Dollar index (DXY) has turned lower from resistance at 103.54 on two occasions over the last two weeks, resulting in a weekly doji print for the past week. The exhaustion candle puts the index at risk of a correction this week.
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