GBPUSD news - page 30
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GBP/USD forecast for the week of January 5, 2015
The GBP/USD pair broke down below the 1.55 level at the end of the week, essentially “opening the floodgates” to the 1.50 handle. With that, we have plenty of reasons to sell this market and absolutely no interest in buying it. At this point in time, the 1.55 level now looks as if it’s resistance, mainly because it was previously support. The market looks as if it’s ready to continue to grind lower because of that, so we are simply waiting for resistant candle in order to push the value of the British pound down.
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GBP/USD weekly outlook: January 5 - 9
The pound sank to 17-month lows against the broadly stronger U.S. dollar on Friday after data showed that manufacturing growth in the U.K. unexpectedly slowed last month.
GBP/USD was down 1.61% to 1.5326 late Friday after a report showed that the Markit U.K. manufacturing index unexpectedly slid to a three-month low of 52.5 in December from 53.3 in November.
The data added to concerns that the rate of the economic recovery in the U.K. is moderating and underlined the diverging monetary policy stance between the Federal Reserve and other major central banks.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, advanced 0.91% to nine-year peaks of 91.47 on Friday. The index rallied 12% in 2014, boosted by expectations that the Fed will raise interest rates in the coming year as the steady economic recovery in the U.S. continues.
Elsewhere, the dollar rose to four-and-a-half year highs against the euro and reached parity against the Swiss franc for the first time since December 2010 after remarks by European Central Bank President Mario Draghi fuelled expectations for full blown quantitative easing.
In an interview with German financial newspaper Handelsblatt Draghi said the risk of the ECB not fulfilling its mandate of price stability is higher now than six months ago, signaling that it is moving closer to implementing quantitative easing measures.
EUR/USD was down 0.85% to 1.2002 in late trade, the weakest level since early June 2010.
The single currency was also pressured lower after data showed that manufacturing activity in the euro area grew at a slower rate than initially estimated in December, adding to concerns over the outlook for fourth quarter growth.
USD/CHF was up 0.83% to 1.0014 in late trade as weakness in the euro added to pressure on the Swiss National Bank to defend its 1.20 per euro exchange rate floor.
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U.K. construction PMI falls to 17-month low in December
U.K. construction sector activity expanded at the slowest rate in 17 months in December, fuelling concerns over the country’s economic outlook, industry data showed on Monday.
In a report, market research firm Markit and the Chartered Institute of Purchasing & Supply said that their U.K. construction purchasing managers' index declined to a seasonally adjusted 57.6 last month from a reading of 59.4 in November. Economists had expected the index to fall to 59.0 in December.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Commenting on the report, Tim Moore, senior economist at Markit and author the report, said, “UK construction output growth retreated further in December, but another strong expansion of house building activity ensured that the sector continued to perform impressively overall."
GBP/USD was trading at 1.5297 from around 1.5310 ahead of the release of the data, while EUR/GBP was at 0.7815 from 0.7804 earlier.
Meanwhile, European stock markets remained lower. London’s FTSE 100 dipped 0.55%, the EURO STOXX 50 inched down 0.35%, France's CAC 40 declined 0.1%, while Germany's DAX lost 0.1%.
U.K. services PMI falls to 19-month low in December
U.K. service sector activity expanded at the slowest rate in 19 months in December, fuelling concerns over the health of the economy, industry data showed on Tuesday.
In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index decreased to 55.8 last month from a reading of 58.6 in November. Analysts had expected the index to dip to 58.5 in December.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
Commenting on the report, Chris Williamson, Chief Economist at survey compilers Markit said, “The surveys' suggest the economy grew by 0.5% in the fourth quarter, and the loss of momentum towards the year end will no doubt fuel worries that the upturn is too fragile to withstand higher interest rates."
GBP/USD was trading at 1.5197 from around 1.5220 ahead of the release of the data, while EUR/GBP was at 0.7846 from 0.7834 earlier.
Meanwhile, European stock markets remained lower. London’s FTSE 100 dropped 0.8%, the EURO STOXX 50 dipped 0.1%, France's CAC 40 shed 0.25%, while Germany's DAX declined 0.3%.
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GBP/USD: The Free Fall Continues
the GBP/USD has continued its free fall into the New Year as the currency pair hit a new 17-month low below 1.5100 on Wednesday.
Already in a sharp bearish trend from the 1.7190 high in mid-July of last year, GBP/USD kicked off 2015 with a dramatic plunge that broke down swiftly below the 1.5400 and then 1.5250 support levels.
Since the noted 1.7190 high in the third quarter of 2014, the currency pair has dropped by more than 12% in less than six months. While this plummet has not quite reached the magnitude of EUR/USD’s fall during the same time period, it has been a strong and consistent decline.
The US dollar strength that prevailed towards the latter part of 2014 and has resumed into 2015 continues to exert bearish pressure on GBP/USD. While the downside move for the currency pair has currently been over-extended, the trend continues to push towards lower lows.
With upside resistance on any pullback tentatively residing around the broken 1.5250 level, the next major support targets for this downtrend reside around 1.5000 and then 1.4800.
UK House Prices Rise Unexpectedly in December: Halifax
The average house price in the UK rose 0.9% between November and December, well above market expectations of 0.3% and up from the previous month's revised 0.5%. However, a less volatile quarterly annualized gauge showed prices decelerated to a rise of 7.8% from 8.1% in the same quarter last year, according to Halifax House Price Index report.
On a quarter-on-quarter basis, house price inflation slowed to 0.3% from 0.8% in a previous quarter which the Halifax said was the fifth consecutive quarterly decline.
“The deterioration in housing affordability as a result of rising house prices, earnings growth that has been consistently below consumer price inflation until very recently and speculation of an interest rate rise, have combined to temper housing demand since the summer. The weakening in housing demand has led to a reduction in both price growth and sales in recent months," Martin Ellis, Halifax housing economist, said.
"We expect a further moderation in house price growth over the coming year with prices nationally predicted to increase in a range of 3 to 5% in 2015. Housing demand, however, should continue to be supported by a growing economy, rising employment levels, still low mortgage rates and the first gain in ‘real’ earnings for several years," he added.
According to the Nationwide House Price Index, average asking prices of properties in the UK decelerated to a rise of 0.2% between November and December, down from 0.3% measured a month before.
Rightmove reported a similar price pattern for December when the average price of property in the UK declined by a record 3.3% between November and December, which reduced annual price growth to a rise of only 7%, down from 8.5% a month before.
Despite this monthly record drop, Rightmove estimated that house prices would continue to rise in 2015 by an average of 4% to 5%, driven primarily by a shortage of new property coming to market, and increased buyer sentiment, aided by a continuing low interest rate environment and boosted by stamp duty reform.
Demand for mortgage wanes at 2014 end
Demand from UK consumers for secured loans for house purchases decreased significantly in the fourth quarter of 2014, but major lenders expect a slight bounce back in the next three months, the Bank of England (BoE) Credit Conditions Survey showed this week.
Weaker demand for mortgages has been reflected by a sharp fall in approval, which according to the Bank of England’s credit report fell to its lowest in 17 months in November. The British Bankers' Association (BBA) reported the number of mortgage approvals between October and November had decreased the most since April 2013, while the volume of loans for house purchases continued to rise
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Bank of England holds key rate at 0.50%, QE unchanged at £375B
The Bank of England kept its benchmark interest rate unchanged in January and announced no change to its asset purchase facility program, it said on Thursday.
The BoE said it was holding the benchmark interest rate at 0.50%, in a widely expected move.
The central bank also said it was to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion.
The minutes of the meeting of the central bank’s monetary policy committee will be published on Wednesday, January 21.
Minutes of the central bank's December policy meeting showed that Martin Weale and Ian McCafferty voted for a 0.25% hike in the benchmark rate to 0.75% for the fifth consecutive meeting.
GBP/USD was trading at 1.5064 from around 1.5063 ahead of the announcement, while EUR/GBP was at 0.7812 from 0.7816 earlier.
Meanwhile, European stock markets were broadly higher. London’s FTSE 100 jumped 1.8%, the EURO STOXX 50 surged 2.3%, France's CAC 40 rose 2.2%, while Germany's DAX advanced 1.75%.
Forex - GBP/USD rises off 18-month lows after upbeat U.K. data
The pound rose against the U.S. dollar on Friday, pulling away from 18-month lows as the release of positive U.K. manufacturing and trade balance data lent support to sterling, although demand for the greenback continued to receive broad invstor support.
GBP/USD hit 1.5150 during European morning trade, the pair's highest since Wednesday; the pair subsequently consolidated at 1.5134, gaining 0.30%.
Cable was likely to find support at 1.5032, Thursday's low and an 18-month low and resistance at 1.5274, the high of January 6.
In a report, the U.K. Office for National Statistics said that manufacturing production rose 0.7% in November, beating expectations for a 0.3% gain, after a 0.7% fall the previous month.
On the other hand, U.K. industrial production ticked down 0.1% in November, data showed on Friday, confounding expectations for an increase of 0.2%. October's figure was revised to a 0.3% slip from a previously estimated 0.1% fall.
A separate report showed that the U.K. trade deficit narrowed to £8.85 billion in November from £9.84 billon in October, whose figure was revised from a previously estimated deficit of £9.62 billion.
Analysts had expected the trade deficit to narrow to £9.40 billion in November.
The data offset a recent string of weak U.K. economic reports and came a day after the Bank of England's monetary policy committee voted to hold the benchmark interest rate at 0.50% and left the size of its asset purchase program unchanged at £375 billion.
Meanwhile, the dollar remained broadly supported after data on initial jobless claims released on Thursday pointed to an ongoing recovery in the labor market.
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GBP/USD forecast for the week of January 12, 2015
The GBP/USD pair fell during most of the week, but as you can see found quite a bit of support near the 1.50 level. This of course is a large, round, psychologically significant number. That being the case, the market appears to have found quite a bit of buying pressure underneath, and as a result we feel that we are most certainly in danger of bouncing from here. We recognize that the 1.55 level above is resistance, but we also recognize that the market is completely oversold at this point.
With that being said, we fully anticipate this market heading back to the 1.55 handle, but remember if it is now a trend change, these things take significant amount of time. Quite often, you will see the market bounce around for some time before we finally break out to the upside. If we do break above the 1.55 handle, we will have a bit of a fight in this general vicinity, but that could be the catalyst to finally change the trend.
The shape of the hammer is just about perfect, but also points out just how important the 1.50 level is. After all, this is about as perfect of a “large, round, psychologically significant” number that you can find. This market looks as if it’s ready to bounce, and quite frankly the British pound has been punished unfairly. Granted, the US dollar is the strongest currency in the world, but that does not mean that the British pound has to be slammed in the process. This is a market that has certainly gone way ahead of itself, so it really wouldn’t surprise us if the markets had to at least have a bit of a relief rally, if not a trend change.
With that being said, we do recognize that a break down below the 1.50 level could be the beginning of something rather disastrous. After all, there is a zone of support all the way down to the 1.48 level, so although it break down below the 1.50 level is a negative sign, it will be erratic to say the least. If we did fall below the 1.48 level, that would be absolutely horrific.
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Pound Approaches 18-Month Low Amid Slowing-Inflation Speculation
The pound approached the weakest level in 18 months versus the dollar as the prospect of inflation slowing below 1 percent boosted speculation the Bank of England will keep interest rates at a record low for longer.
A report tomorrow will show U.K. consumer prices rose 0.7 percent in December from a year earlier, the least since 2002 and dipping further below the central bank’s 2 percent target, according to the median forecast of analysts in a Bloomberg News survey. Sterling held a three-day gain versus the euro. U.K. government bonds were little changed with the 30-year gilt yield about two basis points from the lowest level on record.
“Markets are mindful of the upcoming data points, particularly those CPI numbers,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “The Bank of England is going nowhere fast. Sterling looks like it’s going to remain under some pressure.”
The pound fell 0.3 percent to $1.5119 at 10:37 a.m. London time after sliding to $1.5035 on Jan. 8, the weakest level since July 2013. The U.K. currency was little changed at 78.05 pence per euro after strengthening 0.5 percent over the previous three days.
Forward contracts show investors are betting the sterling overnight interbank average, or Sonia, will be at 0.54 percent at the BOE’s November policy meeting, from 0.43 percent this month, and compared with the central bank’s official borrowing rate of 0.5 percent.
The U.K. central bank may raise interest rates sooner than the market is currently pricing, according to CIBC’s Stretch, who sees a “realistic prospect” of policy makers acting in August. He forecasts the pound will drop as low as $1.45 by mid-year before a moderate recovery to $1.53 by December.
The 30-year gilt yielded 2.33 percent after falling to 2.32 percent on Jan. 6, the least since Bloomberg began collecting the data in 1996. The price of the 3.25 percent bond due in January 2044 was at 119.265 percent of face amount.
Gilts returned 16 percent over the year through Jan. 9, outperforming German and U.S. government securities, according to Bloomberg World Bond Indexes.
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