GBPUSD news - page 12
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U.K. CBI realized sales rise to 6-month high in August
U.K. retail sale volumes rose to a six-month high in August, fuelling optimism over the health of the country’s economy, industry data showed on Thursday.
In a report, the Confederation of British Industry said the result of its index of U.K. retailers improved by 16.0 points to a reading of 37.0 this month from 21.0 in July. Analysts had expected the index to increase by 6.0 points to 27.0 in August.
On the index, a reading above 0.0 indicates higher sales volume, below indicates lower.
The survey of 142 firms also showed that sales were broadly average for the time of year with retailers more optimistic about their business situation for the next quarter than at any time since May 2002.
Sales volumes rose particularly strongly among grocers, chemists and furniture & carpet retailers, but specialist food & drink retailers recorded a fall in sales volumes.
Growth in internet sales volumes also picked up in the year to August, and is expected to strengthen further next month.
Katja Hall, CBI Deputy Director-General, said, “Retailers looking forward to stronger growth in September are keeping their shelves well-stocked in anticipation.”
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GBP/USD flat as investors weigh U.S. data, Ukraine concerns
The pound held steady against the dollar on Thursday as concerns the Russia-Ukraine conflict is flaring up anew offset upbeat U.S. economic indicators.
Geopolitical concerns often weaken the dollar by stoking fears that military conflicts will weigh on the global economy and drag on U.S. recovery as a consequence.
In U.S. trading on Thursday, GBP/USD was up 0.01% at 1.6577 up from a session low of 1.6567 and off a high of 1.6614.
Cable was likely to find support at 1.6537, Wednesday's low, and resistance at 1.6738, the high from Aug. 18.
The dollar saw support earlier after a bout of upbeat U.S. economic indicators pointed to a more sustained recovery in the world's largest economy.
The U.S. gross domestic product grew at a revised annualized rate of 4.2% in the second quarter of this year, according to the Commerce Department, up from a preliminary estimate of 4.0% and better than market forecasts for a downward revision to 3.9%.
The numbers firmed the dollar by cementing expectations that the Federal Reserve will close its bond-buying program around October and hike benchmark interest rates some time in 2015, possibly sooner than once anticipated.
Elsewhere, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending Aug. 22 declined by 1,000 to 298,000 from the previous week’s revised total of 299,000.
Analysts were expecting the figure to rise by 1,000 instead of contract by that amount, which gave the greenback added support.
A separate report showed that U.S. pending home sales increased by 3.3% last month, beating expectations for a 0.5% rise. June's figure was revised to a 1.3% drop from a previously estimated decline of 1.1%.
The greenback, however, came under pressure on fears the Ukraine crisis may be escalating anew.
A top Ukrainian military official was reported as saying earlier that a "full-scale invasion" was taking place in the country, while separate reports that up to 1,000 Russian troops were in Ukraine to assist pro-Russian rebels eclipsed U.S. data and softened the greenback.
The U.S. has repeatedly said Russia has been meddling in the fighting in eastern Ukraine, a charge Moscow denies.
Elsewhere, sterling was up against the euro, with EUR/GBP down 0.13% at 0.7950, and down against the yen, with GBP/JPY down 0.08% at 172.05.
On Friday, expect the pair to move on U.S. personal spending and income reports, a Chicago-area factory gauge and consumer sentiment figures.
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U.K. home prices pick up after slowing: Nationwide
House prices in the U.K. picked up and grew at a renewed pace in August after figures for July showed signs of price moderation, British lender Nationwide said Friday.
The price of an average house increased a monthly 0.8% in August, an 11% growth in annual terms. This figure is below the record-high increase recorded in June but leaves behind signs of price moderation--the monthly increase in July was only 0.2%. The price for a typical house in the U.K. in August was GBP189,306 ($313,992).
Signs of a housing bubble in Britain are reinforced by this steady growth in house prices: August marks the 16th month in a row that dwellings in the U.K. have experienced price inflation, according to the Nationwide index, and a positive third quarter for the economy could fuel further increases. Bank of England Governor Mark Carney said in June that the booming housing market was "the greatest risk to the domestic economy."
During the last Inflation Report, however, the BOE hinted at an interest rate hike happening no sooner than 2015 because real wages are still stagnant. As lower interest rates make mortgage borrowing cheaper, the BOE is afraid that a rate increase might stress the financial situation of many households. At the same time, delaying it is set to help push prices up for the second half of the year, after the introduction of stricter mortgage regulations for lenders cooled off the market during the first part of 2014.
"Surveyors report that new buyer enquiries have moderated somewhat in recent months, and the prospect of interest rate increases together with subdued wage growth may temper demand in the quarters ahead," said Robert Gardner, Nationwide's chief economist. "However, the brightening economic outlook is likely to provide ongoing support for housing demand."
Economic growth itself is tied to house prices as well: Spending is traditionally linked to the rise in the value of homes, as capital gains from rising house prices make consumers feel wealthier. Forecasts predict the British economy to show robust growth for the third quarter, driven by accelerating household consumption--the British Chambers of Commerce on Thursday upgraded its gross domestic product growth forecast for the year to 3.2% from 3.1%. Also, consumer confidence edged up again in August after a small decline the previous month.
Nationwide highlighted that the supply side of the market is still constrained, despite recent reports from other sources showing a moderate pickup in availability.
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GBP/USD forcast for the week of September 1, 2014
The GBP/USD pair bounced during the course of the week, and closed just above the 1.66 level. That being the case, the market looks as if it’s ready to go up to the 1.68 handle, so therefore a break above the top of the range for the previous week has us aiming for that level. We believe that this market will more or less go sideways in the meantime, with an upward bias. There is a massive amount of support just below the 1.65 handle, so selling doesn’t make sense.
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GBP/USD Forecast Sep. 1-5
The British pound remained on low ground, licking its wounds. The new month offers a very busy calendar, with the rate decision and PMIs standing out. Can cable recover? Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD.
BBA mortgage approvals dropped to 42.8K, below expectations while CBI realized sales rose beyond predictions. In the US, growth came out better than expected and other indicators were mostly positive. The pound eventually surrendered to the greenback’s strength. The focus now shifts to the UK.
* All times are GMT
GBP/USD edges higher after mixed U.K. reports
The pound edged higher against the U.S. dollar on Monday, despite disappointing U.K. manufacturing data as an upbeat report on U.K. lending to individuals lent some support.
Trade volumes were likely to remain light on Monday, with markets in the U.S. closed for the Labor Day holiday.
GBP/USD hit 1.6644 during European morning trade, the pair's highest since August 20; the pair subsequently consolidated at 1.6624, adding 0.17%.
Cable was likely to find support at 1.6561, the low of August 29 and resistance at 1.6678, the high of August 20.
Markit research group said the U.K. manufacturing purchasing managers' index ticked down to a 14-month low of 52.5 in August, from a reading of 54.8 in July, whose figure was revised from a previously estimated reading of 55.4.
Analysts had expected the index to rise to 55.0 last month.
A separate report showed that U.K. mortgage lending rose to £2.30 billion in July, from £2.20 billion in June, whose figure was revised up from a previously estimated £2.08 billion. Analysts had expected motgage lending to decline to £2.00 billion in July.
Meanwhile, investors continued to monitor the situation in Ukraine ahead of negotiations due to take place later in the day between Ukrainian and Russian officials and pro-Russian separatists after talks last week resulted in no major breakthrough.
Sterling was also higher against the euro, with EUR/GBP edging down 0.12% to 0.7902.
Sentiment on the euro remained vulnerable after data on Monday confirmed that Germany’s economy contracted by 0.2% in the second quarter, in line with forecasts and unchanged from a preliminary estimate.
Separate reports showed that Germany’s manufacturing sector expanded at the slowest pace in 11 months in July, while factory activity in France contracted at the quickest pace in 13 months.
Slowing growth in the euro area looked likely to add to pressure on the European Central Bank to implement fresh measures to shore up the faltering recovery in the region, ahead of its upcoming monetary policy meeting on Thursday.
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UK Factory Growth Slowest In 14 Months
British manufacturing growth eased further in August to its lowest level in 14 months as output and demand increased at slower rates, survey results from Markit Economics showed Monday.
The Markit/CIPS Purchasing Managers' Index dropped to 52.5 from a revised 54.8 in July. Economists had expected the score to fall to 55.1 from July's original figure of 55.4. The latest PMI reading was the lowest since June last year.
"Sustaining the upturn is nonetheless still a positive in itself, and it should be noted that the pace of expansion remains solid and a touch above its long-run average," Markit Senior Economist Rob Dobson said.
"However, it is also becoming increasingly evident that UK industry is not immune to the impacts of rising geopolitical and global market uncertainty, especially when they affect economic growth and business confidence in our largest trading partner the eurozone."
Output and new orders growth slowed even as the expansion trend was extended to one-and-a-half years. Both domestic and exports orders increased.
Production and new business improved across the board, yet signs of a slowdown have become increasingly evident in recent months, the survey said. Growth rates also eased in all product categories.
Export demand increased for the seventeenth month, but was the slowest since March. Demand was mainly driven by improvement in orders from clients in the USA, Canada, Asia and the Middle East.
Jobs were created for the sixteenth straight month, but the rate of increase slowed to a 14-month low. While small and medium enterprises hired staff, large-scale producers trimmed jobs.
The level of work-in-hand contracted for the sixth month helped by higher production, employment growth and settling of existing inventories. Finished goods stocks fell at the fastest rate since November 2013.
Input price inflation hit a seven-month peak, but was low by historical standards of the survey. Output prices logged a modest increase, the slowest in three months.
"It therefore looks as if manufacturing will provide a lesser contribution to the UK economic growth story in the third quarter than at the start of the year," Dobson said.
"With the market's focus firmly on the Bank of England for any signal on the timing of the expected move in interest rates, the MPC will likewise keep a watchful eye on the other sectors of the economy for signs they can offset the slowdown in manufacturing."
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GBP/USD drops to nearly 5-month lows
The pound dropped to nearly five-month lows against the U.S. dollar on Tuesday, despite data showing that U.K. construction sector activity expanded at the fastest rate in seven months in August.
GBP/USD hit 1.6546 during European morning trade, the pair's lowest since August 27; the pair subsequently consolidated at 1.6548, sliding 0.36%.
Cable was likely to find support at 1.6525, the low of August 25 and a five-month low and resistance at 1.6615, the session high.
The pound came under pressure after a poll showed the Yes to Independence camp gaining ground in the Scottish referendum battle.
According to The Guardian, the YouGov poll released on Monday night put the lead for the No campaign at six points, down from 14 points in the middle of August and 22 points early last month.
Sterling shrugged off data showing that activity in the U.K. construction sector expanded at the fastest rate since January last month.
The Markit/Chartered Institute of Purchasing & Supply U.K. construction purchasing managers' index rose to 64.0 last month from 62.4 in July. Economists had expected the index to tick down to 61.4.
It was the fastest increase in output since January and was the second-strongest rate of output expansion since the pre-recession peak seen in August 2007.
Residential construction posted the fastest rise in activity, the report said. Civil engineering activity increased at the strongest pace since March, while growth in commercial construction remained close to the fastest rate since the summer of 2007.
Meanwhile, investors continued to monitor developments in Ukraine after European Union leaders threatened over the weekend to impose a new round of sanctions on Russia if Moscow does not scale back its involvement in the conflict in eastern Ukraine.
Sterling was also lower against the euro, with EUR/GBP rising 0.28% to 0.7927.
In the euro zone, official data showed that the number of unemployed people in Spain rose by 8,100 in August, far below expectations for an increase of 26,000. In July, the number of unemployed people had dropped by 29,800.
Sentiment on the single currency remained fragile amid mounting expectations that the European Central Bank will implement fresh measures as a way to shore up long term inflation expectations after data last week showed that the annual rate of euro zone inflation slowed to a five year low of 0.3% last month.
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Pound’s Volatility Surges by Most Since 2008 as Scots Vote Looms
A gauge of future price swings for the pound against the dollar jumped by the most in almost six years as a survey showed support for Scottish independence is rising before this month’s referendum.
One-month implied volatility, used to help price derivatives that protect against moves in the exchange rate, surged 21 percent, the biggest increase since October 2008. The U.K. currency weakened against both the dollar and the euro for the first time in five days after the poll by YouGov Plc for the Times and Sun newspapers showed a narrower lead for those favoring remaining part of the U.K.
“There is no doubt that the jitters ahead of the referendum are weighing on the pound, and the latest poll didn’t help,” said Jane Foley, a senior currency strategist at Rabobank International in London. “It creates uncertainty and people are increasing their use of options to protect themselves.”
Implied one-month volatility in sterling against the dollar rose to 6.1775 percent at 1:40 p.m. London time, according to data compiled by Bloomberg, the largest one-day surge since Oct. 24, 2008. It reached 6.35 percent, the highest since March 17.
Until today, currency markets had largely ignored Scotland’s vote on independence, with a three-month measure of implied volatility against the dollar falling the most among Group-of-10 nations in August. While sterling weakened 0.7 percent in the past month, it’s still up 6.9 percent on a one-year basis, according to Bloomberg Correlation-Weighted Indexes that track 10 major currencies.
Sterling Risks
“A yes vote would create both economic and political uncertainty,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London. “This could deter foreign investor inflows, and even longer-term foreign direct investment, which have been a major supportive factor for the pound.”
Morgan Stanley estimates that the pound could fall by as much as 10 percent on a trade-weighted basis if Scotland votes for independence.
The U.K. currency fell 0.5 percent today to $1.6526 after sliding to $1.6501 on Aug. 25, the lowest level since March. It weakened 0.5 percent to 79.41 pence per euro.
Latest Poll
Little more than two weeks before the Sept. 18 ballot on independence from the U.K., the “No” vote against independence dropped to 48 percent from 51 percent in the last survey two weeks ago, the YouGov poll showed. That compared with 42 percent who said they’ll vote Yes, up two percentage points. Ten percent said they’ve yet to make up their mind.
Stripping out undecided voters, the poll found 53 percent of respondents would vote against independence and 47 percent in favor. The six-point deficit narrowed from 14 points in the last YouGov poll conducted Aug. 12-15.
The two largest British bookmakers cut the odds for Scotland voting for independence as the gap in opinion polls narrowed. William Hill Plc put the chances of a “yes” vote at 11-4, meaning a bet of four pounds would win 11 pounds plus the return of the stake, reducing the odds from 4-1 last week. A bet on voters rejecting independence gets 1-4. Ladbrokes Plc showed the same odds on its website.
Gilts declined alongside Treasuries and German bunds as stocks and the dollar advanced before data today that analysts forecast will show an expansion in U.S. manufacturing.
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An independent Scotland couldn't rejoin EU if it kept pound -British minister
An independent Scotland could not rejoin the European Union if it used the pound informally, a senior British minister will say on Tuesday, citing a former top EU official, less than three weeks before a historic breakaway referendum.
In a move he hopes will persuade Scots to spurn independence, Danny Alexander, the second most senior figure in Britain's finance ministry and a Scot himself, will cast serious doubt on Scottish nationalists' plan to keep the pound.
"An independent Scotland would face a simple choice - using the pound like Panama uses the dollar, or joining the EU. It can't have both," Alexander, a member of the Liberal Democrats, the junior partner in Britain's coalition, will say.
"This shows yet again the nationalists failure to put forward a credible currency plan and the dangers it poses to the people of Scotland," he will tell an audience at the Chatham House think tank in London according to a text released by his office in advance.
Scots vote on whether to end their 307-year union with England and break up the United Kingdom on Sept. 18 with the issue of which currency an independent state would use dominating much of the debate.
After months of opinion polls showing Scots nationalists are heading for defeat in the Sept. 18 referendum, a YouGov poll on Tuesday showed the anti-independence camp's lead had shrunk to 6 percentage points from 22 a month ago.
The pro-independence side has said it believes what would be left of Britain in the event of a "Yes" vote would agree to a currency union and allow the new state to use the pound, something Britain's three main political parties have rejected.
It has held out the possibility that an independent Scotland could informally use the pound if a currency union didn't happen, however, an arrangement that would be known as "sterlingisation".
Another option would be to have Scotland's own currency.
Alex Salmond, the leader of the pro-independence Scottish National Party, has also said he wants Scotland to rejoin the EU.
However, Alexander on Tuesday published advice he said he had received from Olli Rehn, the outgoing European Commissioner for Economic and Monetary Affairs, which casts Salmond's plans into doubt.
"As to the question (of) whether 'sterlingisation' were compatible with EU membership, the answer is that this would simply not be possible, since that would obviously imply a situation where the candidate country concerned would not have a monetary authority of its own and thus no necessary instruments of the Economic and Monetary Union," Rehn said in a letter with Tuesday's date.
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