GBPUSD news - page 116
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UK December Retail Sales Slide 1.9%, Prices Edge Higher
UK retail sales volumes fell sharply in December with a decline of 1.9% for December, which dragged the annual increase down to 4.3% from 5.9% previously as the November increase was revised to show a 0.1% decline from the original 0.2% gain. The data was sharply weaker than consensus forecasts of a 0.1% fall for the month and the weakest monthly figure since April 2012.
Excluding fuel sales, there was a 2.0% decline for the month with the annual increase at 4.9%.
On a 3-month basis, sales rose 1.2% with a 5.6% annual increase.
Sales were weak across most sectors, although the biggest decline was in non-food stores with sales of household goods declining 7.3%. Clothing sales also fell 3.7%, while food sales were broadly resilient.
The monthly data is always erratic and there are huge seasonal adjustment issues for December given the impact of Christmas sales. The data will, however, tend to reinforce expectations that there will be an underlying slowdown in sales growth from unsustainable levels as the growth in real incomes slows.
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British Pound Clings to ’Flash Crash’ Range Ahead of UK/US GDP Report
Fundamental Forecast for the British Pound: Neutral
GBP/USD may continue to face range-bound conditions ahead of the ‘Brexit’ deadline as Prime Minister Theresa May pushes for a clean break from the European Union (EU), but the bearish sentiment surrounding the British Pound may subside over the near-term as the Bank of England (BoE) changes its tune for monetary policy.
Even though the BoE looks poised to retain the highly accommodative policy for the foreseeable future, the recent uptick in the U.K. Consumer Price Index (CPI) may sway central bank officials to adopt a more hawkish tone at the next ‘Super Thursday’ event on February 2, and Governor Mark Carney may show a greater willingness to gradually move away from the easing-cycle as he anticipates a ‘notable’ increase in inflation. With that said, market participants may pay close attention to Governor Carney next week as the central bank head is scheduled to speak at the G20 conference in Wiesbaden, Germany, but more of the same rhetoric may keep GBP/USD within the current range as the Monetary Policy Committee (MPC) warns ‘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.’
Looking at the economic docket for the week ahead, the 4Q Gross Domestic Product (GDP) reports coming out of the U.K. & U.S. may generate a buzz as both regions are projected to grow at a slower pace compared to the previous quarter, but the backward-looking data prints may do little to alter the range-bound conditions in the pound-dollar exchange rate amid the diverging paths for monetary policy. Fed Fund Futures are now pricing a greater than 70% probability for a June rate-hike as Chair Janet Yellen argues the Federal Open Market Committee (FOMC) is ‘closing in’ on its dual mandate, and the pickup in interest-rate expectations continues to foster a long-term bearish forecast for GBP/USD as the central bank remains on course for further normalize monetary policy in 2017.
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GBP/USD forecast for the week of January 23, 2017
The British pound bounced off of the 1.20 level underneath to form a very strong looking candle, engulfing the hammer from the previous week. If we can break above the 1.25 level above, I believe that the market will continue to go higher. In the meantime though, it’s probably easier to deal with this market from a shorter-term perspective rather than the weekly chart. If we breakdown below the 1.20 level, that would be catastrophic. Regardless, I think you can count on seen quite a bit of volatility in this market.
GBP/USD Weekly Forecast January 23-27
Last week was a quite a ride for GBP/USD. The week kicked off in Asia with a rare event in the FX market – a gap to the downside. The sharp drop lower in GBP/USD was sparked by reports last weekend indicating that during the planned speech by British Prime Minister Theresa May, which took place January 17th, she would lay out plans for a “hard” Brexit and that she was willing to quit the European Union’s single market to regain control of Britain’s borders. The news resulted in sharply lower open in Asian trading Monday and a test of the October 7th “flash crash” low at 1.1905, with GBP/USD falling to 1.1986 for a low.
However, fears were eased when May took to the podium last Tuesday, as the Prime Minister stated Britain will leave the EU single market and promised a parliamentary vote on Britain’s deal to leave the European Union and said it would seek to stay a key European partner. May also stated that she is confident that a positive agreement can be reached with the EU and that she does not want to undermine the single market or the European Union.
This was perceived as positive for sterling, which was already trading above Monday’s levels ahead of May’s speech. The move to the upside in GBP/USD accelerated on May’s comments, with the pair rising approximately 3%, the largest climb ever in the dealing data – which goes back to 1998 – according to a report from Thomson Reuters. Sterling also gained more than 2 percent against the euro, with dealers reporting a widespread squeeze on short positions taken in derivatives markets.
Tuesday’s advance lifted GBP/USD to test the highs established on January 5/6 at 1.2430/1.2433 and price action has been capped at that level since.
On Wednesday, GBP/USD pulled back in reaction to the extreme overbought condition that resulted from Tuesday’s massive rally. Support was found at 1.2254 and that level provided a floor for the pair on both Thursday and Friday.
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GBP/USD Moving Higher, Breaks Out of Falling Trend Channel
GBP/USD is displaying strength in today’s session and has broken out to the upside of the falling trend channel that has contained price action for the past several weeks. The pair is currently trading at 1.2451, up 0.63% from Friday’s close.
The US dollar index (DXY), at the same time, is trading at a one-and-a-half-month low at 100.32, down 0.49% from Friday’s close. DXY, which measures the dollar’s strength against a basket of six major currencies on a trade-weighted basis, is lower today as investors react to Donald Trump’s inauguration speech on Friday, during which he failed to outline his plans for fiscal spending and tax cuts, two factors which drove the rally in the dollar from the November low to the early January peak.
In addition to weakness in the dollar, GBP/USD is benefiting from strength in the sterling, which is higher as investors bet Britain’s Supreme Court on Tuesday will rule the government needs parliamentary approval to trigger formal Brexit talks, according to a report from Reuters.
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GBPUSD pushes back down through 1.2500
After highs of 1.2548 we've seen a steady retreat in late Asian trading 24 Jan
Some general USD demand again helping it on the way with USDJPY sticking its head above 113.00 again and EURUSD ticking back below 1.0750.
Traders seem to have been factoring in a Supreme Court ruling against the govUK April-December Public Sector Borrowing Requirement Declines 14%
The UK public sector net borrowing requirement, excluding public sector banks, declined to £6.9bn for December 2016 from £7.3bn in December 2015 and the deficit was slightly lower than consensus forecasts.
For the first nine months of fiscal 2016/17, the borrowing requirement declined to £63.8bn from £74.5bn the previous year.
Net debt increased to 86.2% of GDP from 84.5% the previous year.
The Office of Budget Responsibility (OBR) has forecast a deficit of £68.2bn for the current fiscal year from the actual figure of £75.4bn for fiscal 2015/16.
In the year to date, government revenue increased 4.8% from the previous year with income taxes rising 2.6%, while corporate tax revenue increased by 9.9%. Government spending increased by 1.4% over the year with debt interest payments rising 6.7% to £38.1bn.
Firm revenue growth will boost confidence that the government will meet its full-year target, although the January data will be crucial given that this is a key month for tax revenue, which should lead to a substantial monthly surplus.
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January 2017 UK CBI industrial trends orders 5 vs 2 exp
January 2017 UK CBI industrial trends orders 25 January 2017
GBP: Brexit Still On Track; Staying Short Sterling Targeting 1.20 In 3 Months
The UK Supreme Court ruled yesterday that the government cannot trigger Article 50 without an act of parliament, but did not specify what form this legislation must take, allowing for the swift passage of a straightforward bill.
This ruling keeps the government on track to trigger Article 50 by March, following which we expect with the FX market to price a greater probability of “hard Brexit”, driving Sterling down.
We recommend short GBP in our Top Trade #1 and forecast GBP/$ at 1.20, 1.18 and 1.14 in 3, 6 and 12 months
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January 2017 UK CBI distributive trades sales -8 vs 22 exp
Details from the January 2017 UK CBI distributive trades data report 26 January 2017