GBPUSD news - page 36
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UK Factories' Growth Up in Feb as Exports Bounce Back: CBI
Business activity in UK factories strengthened in February, as 26% of firms reported total order books to be above normal while 16% said they were below normal, giving a balance of +10%. This is the highest level in six months, up from 4% a month before, and above market estimate, the latest Industrial Trends Survey by the Confederation of British Industries (CBI) revealed today.
The survey of as many as 522 manufacturers also showed export orders surged to a level above average, but remained well below domestic orders. Factories also expect a slight increase in selling prices in the next three months "although expectations for price inflation remain moderate on the whole."
"Our manufacturers have more of a spring in their step this month, regaining some of the momentum lost towards the end of last year. The drop in oil prices is good news for the manufacturing sector in the UK, bringing with them lower operating costs, but North Sea producers are clearly suffering," Rain Newton-Smith, CBI Economics Director, said.
"Export orders picked up significantly, to a level not seen for six months, but uncertainty over prospects in the Eurozone will continue to weigh on export demand. So, it’s imperative we continue to help manufacturers sell their products and services into high-growth markets around the globe," Smith added.
The CBI brings the first insight into February’s manufacturing sector performance. The Markit's latest PMI survey showed business activity strengthened in January, as lower production costs and a stronger domestic market continued to keep the sector resilient to market woes.
On the outlook for the sector, Markit's senior economist Rob Dobson said, "There were also signs of improvement in overseas markets ... it still looks as if lackluster demand from the eurozone in particular remained a headwind for British manufacturers ... this could soon change, however, if quantitative easing by the ECB has the desired effect of boosting demand in the euro area."
According to the latest official figures, total industrial production declined below expectations at the end of last year, due to extended maintenance on oil and gas rigs in the North Sea which halted oil production. Figures were offset by a better-than-expected performance in manufacturing.
Factories' output was up 0.1% in December. Performance was driven up by an increase in computer, electronic and optical products, the manufacture of transport equipment, particularly airspace craft and the manufacture of food products, beverages and tobacco. On a quarter-on-quarter basis, factories' output increased 0.1% in the fourth quarter of 2014, down from a growth of 0.3% in the previous three months.
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GBP/USD forecast for the week of February 23, 2015
The GBP/USD pair went back and forth during the course of the week, but the one thing that he did show was that there is a significant amount of resistance at the 1.55 level. Because of this, we feel that the market will more than likely drop from here, but also recognize that there is a massive amount of support at the 1.50 handle. Because of this, there is absolutely no reason for the longer-term trader to be involved in this market.
We believe that there is a significant amount of resistance above the 1.55 handle, extending all the way to the 1.58 level. With that being the case, it’s always impossible to imagine buying this pair until we get well above the 1.58 level, which of course is reason enough to put us in essentially a “sell only” type of mode.
Looking at the shape this candle, we believe that there is a bit of selling pressure, but at the end of the day it is essentially a fairly neutral candle that shows that there is a bit of confusion. It might be difficult for longer-term traders to be involved in this market, but ultimately we feel that the short-term traders will continue to bounce this pair from the 1.55 level as it offers a significant amount of bearish pressure. With that, we only have one move, it’s to sell this market but we also recognize that getting below the 1.50 level is going to be almost impossible in the near term as the market has probably gone a little bit too far, too quickly.
If we do break down below the 1.50 level however, that would be an extraordinarily bearish sign and we believe that this pair could very easily go down to the 1.40 level without too many issues. We believe that the market should continue to favor the downside, but also recognize that there is a lot of noise that is going to make this a very difficult trade to hang onto to the downside.
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GBP/USD Forecast Feb. 23-27
The British pound was unchanged last week, as GBP/USD closed at 1.5382. This week’s highlight is Second Estimate GDP. Here is an outlook on the major events moving the pound and an updated technical analysis for GBP/USD.
British inflation levels continues to point downwards, as CPI dipped to just 0.3% in the January report. There was better news from employment data, as Claimant Count Change posted a sharp drop of 38.6 thousand. In the US, the Fed minutes limited dollar gains, as policymakers raised concerns that a rate hike might hurt the US recovery. Unemployment claims dropped sharply, but manufacturing numbers disappointed.
* All times are GMT
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Pound Waits for Incentives, Remains Below $1.54
The pound was lower on Monday, with little in the way of incentives today, as traders look ahead to the UK GDP which is out on Thursday, and the testimony from Federal Reserve (Fed) Chair Janet Yellen on Tuesday.
The pound inched down 0.12% to $1.5377 versus the dollar on Monday, bouncing lower after nearing the $1.54 level earlier, with the intraday low so far standing at $1.5364.
The upcoming week will be dominated by the semi-annual monetary policy report of the Fed Chair Yellen as investors want to hear her take on when the policy adjustment might begin.
Investors will mainly look for Yellen's attitude towards the "patient" language - any hints that she would be in favor of dropping the guidance in March would in turn indicate a possibility of a June/July rate hike.
The second estimate of UK GDP is expected to confirm the preliminary reading of 0.5% growth in the final quarter of the year, quarter-on-quarter, and 2.7% when measured annually.
Technical analysis
The important intraday zone of $1.5350, mentioned last week, held until fundamental news from the UK, when prices spiked up very sharply from that level.
GBP/USD is now fighting with that zone once again as the resistance zone right below $1.55 held upward pressure. We like that strong resistance there and we are looking for short entries once again as prices move towards that level and retest it.
It is important to scale in by parts, instead of opening a whole position at once, because support and resistance are zones as opposed to exact points, and the range of resistance in our case is wide.
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UK Sees Surprise Dip in February Retail Sales: CBI
Both retail sales volumes and orders disappointed significantly in February but store owners still feel optimistic sales will rebound in March, the Confederation of British Industries (CBI) informed on Monday.
In its monthly Distributive Trades Survey, the CBI said weak department stores and food sales led to the overall monthly sales balance to drop to +1%, down from +39% a month before and far below estimates.
"After a strong start to the year, retailers were disappointed by the unexpected halt in sales growth. In particular, continually heavy discounting in the grocers sector seems to be weighing on activity," Rain Newton-Smith, CBI director of economics commented on the report.
"Looking ahead, the outlook for the retail sector is fairly positive, with the boost to household incomes from falling inflation likely to support spending. Indeed, firms remain upbeat about the businesses situation over the coming quarter. However, as this survey shows, overall trading conditions on the high street remain challenging," he added.
The CBI survey offers the first insight into February's retail sector performance. The official data for this month will be released later in March.
According to the latest official statistics, UK retail sales in January fell below expectations to their lowest level in twelve months, driven down mainly by a drop in food sales.
"The prospects for retail sales and consumer spending currently look bright given significantly improving real earnings growth, rising employment and elevated confidence. Furthermore, it now looks highly possible that interest rates will not rise until 2016," Howard Archer, chief economist with IHS Global Insight, wrote after the January retail sales release last Friday.
'Lowflation' to boost consumers' morale
The latest Markit's Household Finance Index showed record-low inflation in the UK has continued to spur consumers' optimism at the start of the year. Financial morale among consumers picked up sharply as the current and future inflation perceptions fell sharply in recent months.
Economists and monetary policymakers alike argue low inflation and cheaper energy should continue to boost spending throughout this year.
Consumer price inflation dropped to the record low of 0.3% in January, driven down primarily by cheaper fuels and food, and is expected to fall further towards zero sometimes in spring.
Retail sales volumes accelerated sharply in the fourth quarter of last year. Strong sales partly reflect improved confidence and an increase in consumer credit supply. The British Banking Association reported earlier that unsecured credit had risen sharply as "higher demand for personal loans continues to reflect an easier borrowing climate and improved household finances."
The UK's statisticians said the surge in the retail sector in the fourth quarter of 2014 should have a positive contribution to the total GDP on its expenditure side.
The first GDP estimate, measured only on its output side, showed the economy slowed to 0.5% in the final three months of 2014, from 0.7% in the previous three months. However, given such a strong retail performance and a healthier trade balance at 2014 end, the next two GDP estimates, which will include expenditure data, might translate into an upward revision to GDP growth, due later this month. The Bank of England expects 0.6% Q4 GDP growth after the final estimate.
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Cable pops 1.5500 as Europe gets underway
Yes folks, that 1.5480 elephant is finally out of the room and so too is 1.5500 as I type with stops through there triggering a move to 1.5513
Currently 1.5508 I'm staying out of this for the moment having had a decent time on the previous rallies to 1.5480
Looks underpinned again with EURGBP also tied down by offers into 0.7350
Nothing wrong with looking on from time to time rather than have something in it. Indeed, it can often help to give a fresh perspective
Let's see what pans out but the GBP bulls will be enjoying this breakout and hoping for further momentum. I remain unconvinced but as I've said often lately there's some good two-way business o be had and we know now, if we didn't before ( which I think we did reallly) that 1.5330-35 remains the new line in the sand downstairs
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UK Preview: Will Second GDP Estimate Surprise on Upside?
The first estimate of the UK gross domestic product (GDP) showed the economy slowed to 0.5% in the fourth quarter of last year, down from 0.7% measured in the previous three months. Expectations ahead of the second estimate suggest no change to the headline quarterly figure. The Office for National Statistics (ONS) is releasing fresh data on Thursday morning.
The first estimate was composed of around 50% of the data available, and included data only on the output side of GDP.
The latest statistics showed industrial production, accounting for some 15% of the total GDP, was revised up by two percentage points to a growth of 0.1% in the fourth quarter, which is unchanged from the previous quarter, while manufacturing output growth slowed a little, from 0.3% to 0.1%.
The construction sector disappointed significantly at the end of 2014, as output in this sector was revised down sharply to a decline of 2.1%. However, the ONS analysts said those two revisions should have no impact, or impact less than one decimal place on the first estimate of GDP growth.
The services sector, which is the largest segment of the economy and accounts for nearly 80% of the total GDP, is estimated to have remained unchanged at 0.8%. Because of its significant weight on growth, much will depend on the revisions in the services sector, which the ONS will present on Thursday alongside the second GDP estimate.
Markit's PMI survey showed activity in services slowed to a 19-month low in December. Construction and manufacturing also slowed, which led Markit to suggest that growth in the fourth quarter decelerated to 0.5%.
Stronger expenditure data
Thursday's release will include the expenditure data, which could help boost the headline quarterly figure if there are no significant downward revisions to other segments of growth.
Retail sales volumes accelerated sharply between the third and fourth quarters. The ONS said this was the highest growth since April 2002 and should have a positive contribution to growth on its expenditure side, given the strong impact of household spending on GDP.
The overall trade balance also improved at the end of last year, as the total deficit shrank by £1.6 billion between the last two quarters of 2014. The ONS could not say exactly what the impact on overall GDP in the fourth quarter would be, but admitted it may have less of a negative impact than in the third quarter.
Upbeat forecasts
In its February forecast, the Bank of England (BoE) said it expected growth in the fourth quarter to be revised slightly upward to 0.6% after the final estimate. Further on, the BoE left 2015 annual GDP unchanged at 2.9%, but revised up 2016 growth to 2.9%, from the 2.6% estimated in its November forecast. It also said cheap oil should help boost real income and consumers' spending.
The National Institute of Economic and Social Research (NIESR) expects Q4 growth to have slowed down to 0.5%. But NIESR revised growth projections for the whole of 2015 up to 2.9%, from the 2.5% it had expected in November last year.
In 2016, NIESR expects growth to moderate to 2.3% as "the positive impact of the oil price shock dissipates and domestic demand growth softens." Weaker domestic demand should then be partly offset by stronger UK exports, which are expected to get a boost from a stronger global economy, NIESR expects.
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GBP/USD: Cable Breaches $1.55 Ahead of UK GDP
GBP/USD almost unchanged at 2-month highs on U.K. GDP data
The pound was almost unchanged against the U.S. dollar on Thursday, hovering close to two-month highs after data showed that the U.K. economy grew in line with expectations in the fourth quarter, while sentiment on the greenback remained vulnerable.
GBP/USD hit 1.5552 during European morning trade, the pair's highest since January 2; the pair subsequently consolidated at 1.5531.
Cable was likely to find support at 1.5453, Wednesday's low and resistance at 1.5621, the high of December 31.
In a report, the Office for National Statistics said the U.K. gross domestic product expanded by 0.5% in the final three months of 2014, unchanged from an initial estimate and in line with expectations. The U.K.’s economy grew by 0.7% in the previous quarter.
Year-over-year, U.K. economic growth grew 2.7% in the three months to December, unchanged from a preliminary reading. The U.K. economy expanded at an annualized rate of 2.6% in the third quarter of 2014.
The report also showed that total U.K. business investment fell 1.4% in the last quarter, disappointing forecasts for a 1.9% gain and following a 1.2% decline in the third quarter of 2014.
Meanwhile, the greenback remained under pressure amid lowered expectations for a mid-year U.S. rate hike after Federal Reserve Chair Janet Yellen said in testimony to the Senate Banking Committee Tuesday that it was "unlikely" that economic conditions would warrant an interest rate increase for "at least the next couple of FOMC meetings".
In a second day of testimony to the Financial Services Committee on Wednesday Yellen reiterated this message, saying that wage growth and inflation must rise before the bank can hike rates, despite signs of improvement in the labor market.
Sterling was little changed against the euro, with EUR/GBP at 0.7312.
In the euro zone, Germany's Federal Statistics Office said the number of unemployed people fell by 20,000 this month, compared to expectations for a drop of 10,000, while the unemployment rate held steady at 6.5% in February, in line with expectations.
A separate report showed that the German Gfk consumer climate index rose to 9.7 from 9.3 in January, slightly ahead of forecasts of 9.6.
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GBP/USD: Cable Below $1.55, Trend Unclear
The pair declined on Thursday amid positive US figures and closed below the important $1.55 support on a daily chart, with bulls retreating to lower levels. Ahead of the London open on Friday, cable was seen around $1.5430, unchanged on the day, but down 120 pips from Thursday's highs.
The US CPI on a yearly basis printed -0.1%, down from last month's 0.8% and core inflation on a yearly basis stayed at the previous level, coming in at 1.6%. Durable goods rose 2.8%, well above January's disappointing -3.4% and core durable goods printed 0.3%, also higher from last month's decline of 0.8%.
Moreover, the US GDP data are due later in the session, with the US economy predicted to grow in the fourth quarter at an annualized rate of 2.0%, down from the first estimate of 2.6%. Reaction is expected to be volatile, and discouraging numbers might have potential to push sterling back to the $1.55 area.
On Thursday, the Office for National Statistics reported that the UK economy in the fourth quarter grew 0.5% on a quarter-on-quarter basis and the yearly change printed 2.7%, both figures in line with expectations. The GDP release did not help the pound, as it had already been priced in and the figures did not surprise.
"The USD’s elevated sensitivity to data was demonstrated by Thursday’s price action, with a relatively small upside surprise in core CPI and core non-defence capital goods orders triggering strong dollar gains. The message from Fed Chair Yellen this week emphasized the Fed was moving towards a new stage of data dependency and this implies the USD will also be highly attuned to economic statistics going forward," analysts at BNP Paribas wrote in a note on Friday.
"Data dependency could be less helpful for the USD today, with the Chicago PMI and Michigan sentiment measures expected to moderate further from their recent strong levels and Q4 GDP likely to be revised down from a 2.6% saar to 2.0%. Still, looking beyond day-to-day volatility, we think the trend in data is likely to be broadly consistent with policy tightening beginning in Q3, and this should keep US front-end rates on an upward trajectory," they added.
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