GBPUSD news - page 74
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UK Factory Activity Slows More Than Expected in November: PMI The Markit/CIPS PMI measure of business activity in the UK manufacturing fell to 52.7 in November, down from last month's 16-month high of 55.2, and below expectations of a 53.6 reading. Still, the sector remained in expansion territory for the 32nd month in a row.
"UK manufacturing is moving back into expansion mode during quarter four, as it starts to reverse the losses sustained in the prior quarter. Although the pace of growth so far is only very modest, it positions manufacturing as less of a drag on the broader economy. Robust service sector growth will nevertheless be needed to achieve the 0.6% fourth quarter GDP expansion still required to meet the 2015 growth target outlined in the Chancellor’s Autumn Statement," Markit senior economist Rob Dobson said.
On the Bank of England (BoE) front, Dobson said: "Deflationary pressures are still prevalent at manufacturers as input costs fell at one of the sharpest rates in survey history and output selling prices fell further. If this mix of subdued growth and weak price pressures is reflected in other sections of the economy, the BoE will have further cause to push any potential rate increase into the spring of 2016."
The report also showed little change in the employment level in UK factories, as the trend moved back close to stagnation following the solid job creation signaled during October.
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UK Construction Decelerates More Than Expected in November: PMI The Markit/CIPS PMI measure of business activity within UK construction companies slowed again in November to 55.3, the weakest for almost two-and-a-half years, down from an eight-month high of 58.8 in October, and missing market estimates of 58.5. The headline measure has been sitting comfortably above the neutral level for nearly three-and-a-half years, but the pace of expansion weakened from the previous year, the PMI surveys showed.
"The UK construction recovery is down but not out, according to November’s survey data. Aside from a pre-election growth slowdown in April, the latest expansion of construction activity was the weakest for almost two-and-a-half years amid a sharp loss of housebuilding momentum," Markit senior economist Tim Moore commented on the release.
Weaker-than-expected business surveys so far in October and November indicate the expected economic rebound in the final quarter of this year may only be very moderate when compared with a 0.5% slow-down in the third quarter.
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GBP/USD: Where To Target The Break Below 1.50? - SocGen GBP/USD faced stiff resistance at 1.55/1.5530 and has achieved downside target at May lows of 1.50 before making a clear break lower today.
"The break below confirms H&S formation and lead to retest of graphical support at 1.48 and even towards 1.45.
Short term recovery if any, is likely to face resistance at 1.5530," SocGen projects.
November 2015 UK Markit CIPS services PMI 55.9 vs 55.0 exp Details of the November 2015 UK Markit CIPS services PMI data report 3 December 2015
Both the services and composite, and both new orders, are at the highest since July
The pound is taking no notice of the better numbers as its funk continues. We couldn't even sustain a measly 10 pip gain and instead fell to 1.4905. That tells us a lot about the mood right now
Markit says the number represents Q4 growth of around 0.6% q/q vs 0.5% in Q3
Jobs growth remained strong but was at the slowest pace in 3 months
Prices rose on both sides. Input costs were up further, mainly on the back of the incoming new National Living Wage. That pushed the survey inflation counter to a 4 month high. Prices being charged were up a touch
Markit's Chris Williamson had this to say;
"The rate of job creation remained resiliently robust in November despite widespread difficulties finding suitable staff and worries about the introduction of the National Living Wage, in turn leading to reports of rising wages. "For now, falling oil and energy costs are offsetting rising wage growth and keeping a lid on inflationary pressures, but the upturn in earnings growth raises question marks over just how long inflation, and therefore interest rates, will remain low for."
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GBP/USD forecast for the week of December 7, 2015 The GBP/USD pair initially broke down during the course of the week, driving well below the 1.50 level. This of course is a psychologically significant number, so it would attract quite a bit of attention. Having said that, we turned back around to form a bit of a hammer and it now looks as if the British pound will continue to trying to gain value. If we can break above the top of the hammer, the market will try as hard as possible to break above the 1.52 level, and more importantly the hammer from 2 weeks ago.
On the other hand, if we break down below the bottom of the hammer that is a very negative sign and the market should then reach towards the 1.45 handle. The US dollar had been strengthening overall due to the fact that the Federal Reserve will probably have to raise interest rates this next meeting, and perhaps even the next one after that. We got a little bit of a “knee-jerk reaction” against the US dollar as the European Central Bank did not add as much stimulus as once anticipated. This had a bit of a “knock on effect” in this market, and of course brought the value of the British pound up.
The one thing that you can count on in this market is probably going to be volatility. Given enough time, the markets will eventually make a steady decision, but in the meantime we have our levels and we are paying attention to in order to place longer-term trades. The volatility will be difficult to deal with, but given enough time it should provide us with a nice trading opportunity.
We believe that the actual “floor” in the market is closer to the 1.45 level, so we could get a rally and then a continued downward move. If we break above the top of the shooting star from 2 weeks ago though, at that point in time we think the market probably reaches towards the 1.550 level, and then the 1.58 handle.
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Cable slides again ahead of UK manufacturing and industrial production data After the softer house price data traders are now positioning ahead of the next set of numbers at 09.30 GMT Expectations are:
GBPUSD has chewed through bids/support around 1.5030 to post 1.5024 with EURGBP highs of 0.7236 helping to kick it lower
More bids below 1.5020 into 1.5000 will provide the next layer of support with offers above 1.5050. EURGBP has sellers into 0.7250 and demand into 0.7200
So it's all ranging but providing opportunity for intra-day traders at least
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GBP/USD Into BoE - Deutsche Bank Deutsche Bank doesn't expect many surprises from today’s Bank of England meeting and minutes.
"Nevertheless, the ability of the MPC to surprise markets and u-turn on prior communication should never be discounted as last month’s very dovish QIR, or Carney’s abandonment of numerical forward guidance last year demonstrates.
One element of our bearish sterling view is that having taken hikes off the table for the first half of 2016, the committee may lose the chance in the second," DB argues.
"...We remain comfortable with being short GBP/USD even if the BoE turns hawkish again," DB advises.
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GBP/ USD forecast for the week of December 14, 2015 The GBP/USD pair initially fell during the course of the week, slicing through the 1.50 level at one point. However, we turned back around to form a massive looking hammer, and it now looks as if the British pound is going to continue to go higher. That doesn’t mean that it’s a longer-term trade, quite frankly we think that this is probably going to be better served for traders on short-term charts as opposed to long-term charts, so having said that we will be on the sidelines as far as long-term trades are concerned.
BOE's Shafik does not want to signal that 0.5% is the new normal Sounds like some backtracking going on
GBPUSD back up to 1.5135
GBP/USD: Traders Take Dark View Of Black Friday Sales Despite some permabears’ fears, the sun did indeed rise this morning and the world most certainly didn’t end after the first interest-rate hike from the Federal Reserve in nearly a decade. As we noted in our instant analysis, the decision was far from the “dovish hike” that many traders had been expecting; for what it’s worth, the median FOMC policymaker still anticipates increasing interest rates four times, or at every other meeting next year, though Fed Funds futures traders are more skeptical, only pricing in a total of two rate hikes, to around 1.0% by end-2016.
In-line with our not-as-dovish-as-anticipated forecast, we’ve seen the US Dollar Index rally back to 99.00, driving EUR/USD back to the mid-1.0800s and USD/JPY up to the mid-122.00s. Probably the biggest FX mover so far this week has been GBP/USD, which has shed over 200 pips from Monday’s open to trade near its 8-month low around 1.4900.
Interestingly, today’s drop has come despite a better-than-expected UK Retail Sales report, which jumped 1.7% m/m in November around the critical “Black Friday” pre-holiday shopping period. On a year-over-year basis, sales rose by a healthy 5%, and the previous month’s report was even revised higher. Although this is ostensibly bullish news for the UK economy and consumer, some analysts have noted that the seasonal adjustment may not fully account for the recent adoption of deep Black Friday discounts in Britain.
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