GBPUSD news - page 52
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GBP/USD: Cable at One-Month Low After US Manufacturing
The GBP/USD pair plummeted to the lowest level since May 5, as the US dollar rallied amid newly found support triggered by improved manufacturing data.
The sterling dropped 0.66% to $1.5185 against the greenback, after reaching the intraday low of $1.5173 - a level last seen about a month ago.
"Final manufacturing surveys for May, published by Markit today, provide some reassurance that global growth should continue at a respectable pace this year. Among the advanced economies, prospects still look brightest for the US and the UK," senior global economist with Capital Economics, Andrew Kenningham, said in a research note.
The Institute for Supply Management (ISM) revealed that its index hit a three-month high, reaching 52.8 in May, following a reading of 51.5 in April. The gauge, where a reading above 50.0 indicates industry expansion, showed that factories across the US beat estimates and grew.
"The small rise in the ISM manufacturing index … puts it at a level that historically has been consistent with GDP growth of around 2%," chief US economist at Capital Economics, Paul Ashworth, said in a note to clients.
Moreover, the latest final PMI print from Markit Economics came in at 54.0, compared to the 54.1 seen in April, signaling that manufacturing activity across America eased in May, but at the same time showed that there is hope for stabilization after the rough winter months.
In comparison, the UK manufacturing PMI hit 52.0 in May, after 51.8 recorded the month before, according to data published earlier in the session. Economists had expected the figure to increase to 52.5.
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GBP/USD rises on upbeat U.K. construction PMI
The pound rose against the U.S. dollar on Tuesday, boosted by upbeat U.K. construction activity data, while demand for the greenback slightly weakened as market participants locked in profits from its recent rally.
GBP/USD hit 1.5240 during European morning trade, the session high; the pair subsequently consolidated at 1.5244, rising 0.28%.
Cable was likely to find support at 1.5161, the low of May 7 and resistance at 1.5345, the high of May 29.
In a report, market research firm Markit and the Chartered Institute of Purchasing & Supply said that their U.K. construction purchasing managers' index rose to 55.9 last month from a reading of 54.2 in April. Economists had expected the index to improve to 55.0 in May.
Commenting on the report, Tim Moore, senior economist at Markit and author the report, said, "May’s survey provides the first sign of a post-election bounce in the U.K. construction sector. With a sustained period of policy uncertainty no longer on the horizon, business confidence surged back to its highest level since early-2006."
However, sentiment on the pound remained fragile amid renewed concerns over a possible British exit from the European Union.
Prime Minister David Cameron’s government introduced a law in parliament on Thursday to ensure a U.K. referendum on EU membership will be held by the end of 2017.
The dollar had strengthened broadly after data on Monday showed that the Institute of Supply Management's index of manufacturing activity was 52.8, up from 51.5 in April and ahead of forecasts for 52.0.
Another report showed that U.S. construction spending rose to the highest level in six-and-a-half years in April, adding to recent signs that the economy is rebounding from a weak first quarter.
The Commerce Department said construction spending jumped 2.2% to an annual rate of $1.0 trillion, the highest since November 2008.
Sterling was lower against the euro, with EUR/GBP edging up 0.13% to 0.7198.
In the euro zone, Germany's Federal Statistics Office said the number of unemployed people fell by 6,000 last month, compared to expectations for a drop of 10,000.
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GBP/USD: Cable Drops Below $1.53 as UK Services Deteriorate
The pound dived against the US dollar on Wednesday, after the UK services sector surprised on the downside in May. Attention now turns to the European Central Bank meeting and economic data from the US.
The pound tumbled 0.42% to $1.5279 against the greenback on Wednesday, falling from its intraday high $1.5374, trading close to its last session's monthly lows around the $1.5260 area.
The UK services PMI, accounting for a major 78.4% of the nation's economy, eased to 56.5 in May, from 59.5 in April, while it was expected to edge down to 59.2.
The data accompanies the construction sector that booked 55.9 in May, following the 54.2 seen in April. Economic desks had anticipated an upturn to 55.0.
Meanwhile in the UK, the latest report from Wednesday showed the Nationwide house price index rose 0.3% in May month-on-month,bringing down the annual growth rate to 4.6% compared to 5.2% in April, the lowest level in 21 months, reflecting the general election uncertainty.
On the upside, mortgage approvals jumped sharply in April, hitting the highest level in 14 months, standing at 68,076.
Looking ahead, the major market mover will come when the European Central Bank meets in Frankfurt, followed by a press conference from bank President Mario Draghi. Interest rates are expected to remain unchanged but questions surrounding the impact of a recently launched quantitative easing and Greek debt issue will certainly come up.
The key data from US will be the ADP private employment report, which will shed light on Friday’s US nonfarm payrolls report. ADP employment change is forecast to hit 200,000 in May, after 169,000 jobs added in the previous month.
GBP/USD rises to 1-week highs ahead of BoE statement
The pound rose to one-week highs against the U.S. dollar on Thursday, as investors awaited the Bank of England's monthly policy statement due later in the day, as well as weekly data on U.S. jobless claims.
GBP/USD hit 1.5414 during European morning trade, the pair's highest since May 27; the pair subsequently consolidated at 1.5393, rising 0.35%.
Cable was likely to find support at 1.5248, Wednesday's low and resistance at 1.5478. the high of May 26.
Later Thursday, the BoE was expected to leave its benchmark interest rate on hold at 0.50% and its asset purchase facility program at £375 billion.
The pound had come under pressure on Wednesday after the Markit services purchasing managers' index slowed to 56.5 last month from 59.5 in April. It was its lowest level since December. Economists had expected the index to tick down to 59.2.
Meanwhile market participants were looking to the weekly report on U.S. jobless claims due later in the day, as well as Friday's nonfarm payrolls data for further indications on the strength of the country's job market.
On Wednesday, payroll processing firm ADP said U.S. non-farm private employment rose by 201,000 last month, just above expectations for an increase of 200,000.
Sterling was lower against the euro, with EUR/GBP rising 0.34% to 0.7373.
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GBP/USD: Cable Retreats Toward $1.53 Ahead of NFP
The pound sterling was giving back gains to the US dollar on Friday, after being bid to a nine-day high close to $1.5450 on Thursday amid profit-taking.
The British pound edged down 0.19% to $1.5328 against the US dollar during the European session, showing mild volatility so far as market awaits the crucial US non-farm payrolls.
The report should reveal 227,000 new jobs added to the US economy after 223,000 a month ago, while the market will also pay close attention to hourly average income.
"Given the lack of price inflation as well as wage inflation the latestaverage hourly earnings datacan also expected to deliver a market reaction if it deviates significantly from expectations,"Michael Hewson, Chief Market Analyst at CMC Markets wrote in an email on Friday.
Meanwhile, the International Monetary Fund (IMF) on Thursday slashed its forecasts for US economic growth and called for the Federal Reserve to hold off its first rate increase in nearly a decade until 2016.
Given the more pessimistic outlook, the IMF urged Fed policymakers to stay patient with a rate hike. "The FOMC should remain data dependent and defer its first increase in policy rates until there are greater signs of wage or price inflation than are currently evident," it said in a statement.
On Thursday, the Bank of England's (BoE) nine-member MPC unanimously shared their decision to keep monetary policy on hold, which had little impact on the currency pair as it was generally expected. Minutes from the meeting will be available on June 17.
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GBP/USD forecast for the week of June 8, 2015
The GBP/USD pair went back and forth during the course of the week, testing the 1.52 level for support, and the 1.55 region for resistance. Ultimately, the market looks like it is trying to figure out which way it wants to go now, but we feel that if we break above the 1.55 level, the market should then go to the 1.58 level. If we break down below the 1.52 level, then we go to the 1.50 level. With that being said, we expect a lot of volatility but it seems as if the market is trying to change the overall trend and go to the upside.
GBP/USD weekly outlook: June 8 - 12
The pound fell against the dollar on Friday after an above forecast U.S. employment report boosted expectations for a rate hike by the Federal Reserve later this year.
The Labor Department reported that the U.S. economy added 280,000 jobs in May, ahead of economists forecast for 220,000. The unemployment rate ticked up to 5.5% from 5.4 in the previous month.
April’s payrolls report was revised to show that 221,000 jobs were created.
Hourly earnings increased 0.3% in May, after a 0.2% increase in April.
The upbeat data, particularly the pick-up in wage growth underlined the view that the economy is on track to rebound after a weak first quarter and bolstered expectations that the Federal Reserve could start to hike interest rates at its September policy meeting.
The dollar rallied against the other major currencies following the release of the data.
GBP/USD fell to lows of 1.5191 before pulling back to 1.5271 in late trade, down 0.61% for the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.93% to 96.38 late Friday.
Sentiment on sterling remained fragile after private sector survey data earlier in the week indicated that growth could struggle to pick up in the current quarter after a weak first quarter.
The U.K. service sector expanded at the slowest rate in five months in May, while the expansion in the manufacturing sector slowed.
Concerns over the prospect of a possible British exit from the European Union also weighed ahead of a referendum on EU membership due to be held before the end of 2017.
In the week ahead, Thursdays U.S. retail sales report and Fridays report on consumer sentiment will be scrutinized for signs that the world’s largest economy is gaining momentum in the current quarter.
A report on U.K. manufacturing and industrial production will also be closely watched.
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GBP/USD: Cable Drops to Fresh Daily Lows, Nears $1.52
The pair did not have the strength to push above $1.53 on Monday and dropped around 80 pips instead, stalling around $1.5230 during London trading.
The dollar came under sudden selling pressure on Monday, but cable erased gains very quickly and was trading lower on the day as traders used the spike to re-enter at better prices with short positions.
Earlier on Friday when US non-farm payrolls, the most influential labor release of the month, revealed employers added 280,000 new jobs to the economy in May, after 221,000 a month ago, while the market expected the figure to print 226,000. Cable dropped around 140 pips, but managed to erase some of the losses on Monday.
From the UK macro calendar, traders will eye trade balance data on Tuesday from the UK, industrial and manufacturing production on Wednesday and Bank of England Governor Mark Carney's speech on Wednesday.
US figures will include jobless claims, retail sales and consumer confidence numbers over the week. The figures will be closely watched as the next Federal Reserve meeting looms and a rate hike at this meeting is still in play.
"While Friday’s jobs number was a welcome sign of an increase in jobs growth, US consumers still appear reluctant to loosen the purse strings, and when looking at the internals of the jobs numbers it isn’t hard to see why, with a lot of the jobs being added at the lower end of the pay scale," Michael Hewson, Chief Market Analyst at CMC Markets wrote in a research note on Monday.
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GBP/USD: Sterling Reclaims $1.53; BoE's Carney to Set Mood
Sterling took advantage of speculation surrounding the White House's attitude toward the strength of the greenback and made up for Friday's losses.
The British pound gained 0.49% on the dollar, buying $1.5335 on Monday. The pair took another swing at breaking to fresh one-month lows on Friday, after an initial failed attempt at the beginning of the week, following a strong US employment report.
The data showed US employers hired 280,000 workers last month, the biggest increase in payrolls the labor market has seen so far this year. Importantly, the year-over-year pace of growth in average hourly wages accelerated to 2.3%, faster than at any point since August 2013.
Yet, traders once again defended sterling just a few pips below the $1.52 barrier after reports that US President Barack Obama thought the dollar was too strong which were later refuted by the White House - the last time the US currency had been substantially stronger than that was on May 6. Still, even above $1.53, the British currency is still losing some 3% on its year-to-date highs of $1.58 seen in mid-May.
Looking ahead, the market will take note of the US job openings and labor turnover survey (JOLTS), but investors will be much more curious to hear from Bank of England (BoE) Governor Mark Carney, who is scheduled to speak on Wednesday several hours after the UK Office for National Statistics releases fresh industrial production data.
In remarks made in Portugal last month, Carney said officials will continue to monitor the pass-through effects of sterling's appreciation on the UK economy.
Rate outlook
The change of tone in the GBP/USD over the past two weeks has mainly reflected the evolution of the outlook for central bank policies.
The BoE last week decided, as was widely expected, to keep policy on hold. Unlike its US counterpart, the BoE does not release any comments on the decision, so traders will have to wait for the minutes from the meeting to gauge the power balance between hawks and doves on the Monetary Policy Committee.
Yet, in its latest macro-forecasts the BoE has signaled some confidence that inflation may stabilize earlier than previously expected. On the other hand, the second reading on the first quarter GDP failed to bring the upward revision markets had been yearning for and confirmed the economy slowed down substantially at the beginning of the year.
In addition, political issues (EU exit referendum) continue to cloud the outlook for the British economy in the wake of the surprising Tory victory in the general elections, which delivered a solid boost to the pound in the first half of May.
"The pound has had a disappointing day after ratings agency Moody's warned that an early EU referendum next year might impact adversely on the UK's credit rating," Michael Hewson, CMC Markets analyst wrote in a note on Monday.
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Preview: UK Trade Deficit to Narrow Slightly in April
April's trade figures in the UK are expected to have narrowed only slightly in April, as analysts do not paint a particularly rosy picture of the near-term outlook for exports, saying these will be hampered by the weak euro zone and strength of the pound.
Market estimates suggest that UK trade deficit shrank only slightly in April, continuing the trend from last month when stronger overseas exports contributed to a narrower total trade balance.
In April, the deficit on trade in goods is estimated to have narrowed slightly to £9.950 billion, down from £10.1 billion booked in March.
The total trade deficit is expected to come in at £2.6 billion, against £2.8 billion a month before.
As for the shortfall with non-EU countries, analysts expect it to narrow to £3 billion from £3.163 billion in March.
The UK trade balance remains one of the weakest segments of the economy, with the trade in goods persistently generating a deficit with both EU and overseas markets.
Last month, the deficit narrowed slightly, as exports to the USA, United Arab Emirates and Qatar reached record highs. Still, the figure missed analysts' forecasts.
According to analysts, exports will ultimately benefit over the coming months from a marked pickup in euro zone growth, while domestic demand will continue to play an important role in UK GDP growth.
However, they also warn the strength of the UK pound against the euro threatens to dilute the upside for UK manufacturing exports to the euro zone.
“Unless we see firm action to improve our export performance, it will be difficult to sustain strong growth in the long term. This must be a priority for the government," said David Kern, chief economist at the British Chambers of Commerce.
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