GBPUSD news - page 85
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GBP/USD: Mixed Signals GBP/USD:Earlier this year, GBP/USD breached below a multiyear ascending channel and sparked fresh negative signals projecting target for the down move initially at graphical levels of 1.36/1.35. Monthly stochastic indicator is now close to a pivotal floor which has cushioned previous down moves suggesting possibility of a consolidation once aforementioned levels are achieved.
However zooming onto recent price action, the pair is undergoing sharp up and down swings and is currently near median of a multi month channel at 1.44/1.4440. It is also evolving within a probable inverted H&S which is giving mixed signals.
Confirmation level at 1.46/1.4750 will remain a key level and only a move beyond this will mean possibility of a larger recovery.
UK GDP Preview: Deficit Seen As Risk Ahead of Brexit Vote Economic growth in Britain has so far remained resilient to the headwinds blowing from overseas. The third and final official estimate of gross domestic product (GDP), due on Thursday, is expected to confirm steady growth of 0.5% in the final quarter of last year. The annual rate of GDP growth is seen unchanged at 1.9%.
The final Q4 GDP release is also expected to show that output in the robust services sector and omnipotent household consumption, were the only major segments pushing the economy forward once again.
But the persistent negative current account balance continues to be one of the primary risks to financial stability in Britain, with economists expecting the deficit to have widened notably during the last three months of 2015 to £21 billion, up from £17.5 billion a quarter before.
An elevated level of investors' uncertainty ahead of the June 23 EU referendum only adds to the concerns about the deteriorating balance of payments.
In its most recent financial stability report, the Bank of England (BoE) raised concerns that the financing of the UK's current account deficit could be further hit by an increased level of uncertainty ahead of the Brexit vote, leading to lower foreign direct investment. The central bank also warned that increased risk premia on UK assets and further depreciation of sterling - both partly stemming from Brexit risks - could add to those downside estimates.
"The UK current account deficit remains high by historical and international standards. The financing of that deficit is reliant on continuing material inflows of portfolio and foreign direct investment. Those flows have contributed to the financing of the public sector financial deficit and corporate investment, including in commercial real estate. Heightened uncertainty could test the capacity of core funding markets at a time when the liquidity of these markets has shown signs of fragility across advanced economies," the BoE judged.
Commenting on those risks, IHS Global Insight's UK chief economist Howard Archer wrote in his GDP preview: "An appreciable hit to business confidence from a Brexit vote is likely due to heightened uncertainty, leading to reduced investment and employment plans. Furthermore, foreign direct investment and portfolio investment flows into the UK would probably take a major hit, which would make financing the UK’s large current account deficit much more of a problem and reinforce the downward pressure on sterling coming from market concerns."
Archer also warned that were the UK to vote for Brexit, "the expected sharp fall in sterling would highly likely lead to a substantial rise in consumer price inflation, thereby eroding consumers' purchasing power," which he argued could lead to lower household consumption, higher unemployment, and tighter fiscal policy.
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Sterling Bounces Off Lows Ahead of GDP Data The British pound manage to bounce from its earlier daily lows on Thursday as UK traders wait for the final Q4 GDP release.
Economic growth in Britain has so far remained resilient to the headwinds blowing from overseas. The third and final official estimate of GDP is expected to confirm steady growth of 0.5% in the final quarter of last year. The annual rate of GDP growth is seen unchanged at 1.9%.
The cable currency pair opened the session 0.23% lower at $1.4325, down from its previous session high of $1.4458.
The Bank of England's (BoE) main concern is that the primary risk to financial stability in Britain comes from a negative current account balance, which could deteriorate further with the elevated level of investors' uncertainty ahead of the June 23 EU referendum.
IHS Global Insight's UK chief economist Howard Archer warned that were the UK to vote for Brexit, "the expected sharp fall in sterling would highly likely lead to a substantial rise in consumer price inflation, thereby eroding consumers' purchasing power," which he argued could lead to lower household consumption, higher unemployment, and tighter fiscal policy.
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GBP/USD forecast for the week of April 4, 2016 The GBP/USD pair initially rose during the course of the week, but found quite a bit of resistance just below the 1.45 level. Because of this, we ended up turning back around and forming a shooting star. Ultimately though, this is a pair that looks as if it is essentially going to continue to bounce around between the 1.40 level on the bottom, and the 1.45 level on the top. Ultimately, it’s probably better to trade this market from shorter-term perspective at this point in time as the market has struggled to make up its mind over the last month or so.
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GBP/USD Weekly Outlook: Pair to Lack Direction, Volatility to Persist The week ahead is not so heavy on the data front, but volatility will most likely continue to be elevated as the pound is still in a dangerous period due to political concerns, while the greenback moved down in the previous days due to the unexpected dovishness shown by the Federal Reserve (Fed).
From the pound point of view, Monday will see the construction PMI for March, which is projected to moderate slightly from 54.2 to 54.0, while on Tuesday, the services PMI should improve to 53.8 from 52.7 booked in February.
Thursday will bring Halifax house prices for March, which should tick lower year-on-year, but on the other hand, the monthly change should improve and get back to positive territory.
On Friday, industrial and manufacturing production figures for February are due, along with trade balance data. Sterling might be volatile afterwards.
The main concern for the pound is still whether the UK will leave the European Union. The latest polls showed that the majority of voters are likely to side with staying, therefore sterling managed to achieve a relief rally from the latest lows.
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UK Builders' Activity Remains Steady in March: PMI The Markit/CIPS PMI measure of business activity within UK construction companies stayed unchanged at 54.2 in March, matching February's 10-month low, but slightly above the market estimate of 54.1.
The feedback to the survey showed that the domestic economy remained supportive to growth in the sector, but some respondents noted that "greater uncertainty about the business outlook had resulted in more cautious spending patterns among clients." Cautiousness about new hiring also increased as the rate of employment growth slowed to its lowest since June 2013.
"March’s survey confirms that the UK construction sector is experiencing its weakest growth phase since the summer of 2013. Residential building has seen the greatest loss of momentum through the first quarter of 2016, which is a surprising reversal of fortunes given strong market fundamentals and its clear outperformance over the past three years," Markit's Tim Moore commented in the report.
The Bank of England said in its most recent business conditions survey that construction output growth had softened over the first quarter quarter of this year, reflecting some easing in housebuilding growth and commercial construction projects.
The latest official statistics showed output within building companies deteriorated at the start of this year. The weaker performance was primarily due to a sharp deceleration in public housing and infrastructure projects. The outlook for the sector also remained somewhat gloomy, as the level of new orders is estimated to have decreased 0.5% during the final quarter of the previous year.
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GBP/USD: Sterling Unimpressed by Upbeat UK Services Data Sterling was unable to bounce from its daily lows after the UK services sector, the largest contributor to the UK economy, showed more resilience to Brexit concerns than initially expected.
Following February's lowest reading since April 2013 at 52.7, the UK services sector picked up to 53.7 in March.
The cable currency pair has broken the major support at $1.4250 and declined to intraday lows of $1.4204. After hitting the previous session's high of $1.43215, sterling was seen 0.31% lower at $1.4218 after the PMI data.
Despite some acceleration observed since the beginning of March, sterling remains still one of the worst performing currencies so far in 2016. The primary downward contributor is an increased probability of Britain leaving the EU after the June 23 referendum.
Fresh polls from OBR showed voters' preference swinging back to a "stay with the EU" majority, but polls after the terrorist attacks in Brussels on March 22 had shown increased anti-EU appetite.
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GBP/USD: Pound Falls on Brexit Jitters Even as Services Improve
The British pound weakened against its US counterpart even as a gauge of activity in the service sector improved in March from close to a three-year low in the previous month. The Markit/CIPS PMI for services in March rebounded to 53.7 from 52.7 in February, the lowest figure since April 2013, Markit Economics said on Tuesday.
The UK currency traded at $1.4156, down 0.7% from Monday’s close, and touched an intraday low of $1.4121.
PMI indicators for the services, manufacturing and construction in the UK confirmed a slowdown in the economy overall in the first quarter, pointing to a 0.4% expansion in economic growth, from 0.6% in the last quarter of 2016, Markit, which compiles the survey, predicts.
"An upturn in the pace of service sector growth in March was insufficient to prevent the PMI surveys from collectively indicating a slowdown in economic growth in the first quarter," Chris Williamson, chief economist at Markit, said. "Business confidence remains in the doldrums as concerns about the global economy continue to be exacerbated by uncertainty at home, with nerves unsettled by issues such as Brexit."
Despite some acceleration observed since the beginning of March, sterling still remains one of the worst performing currencies in 2016. The primary downward contributor is the increased probability of Britain leaving the EU after the June 23 referendum.
Fresh polls from OBR showed voters' preference swinging back to a "stay with the EU" majority, but polls after the terrorist attacks in Brussels on March 22 had shown increased anti-EU appetite.
The dollar recovered from last week’s declines as investors await the release of the minutes from the last Federal Open Market Committee meeting on March 15-16 to gain a deeper insight into policymakers’ views about the economy and the trajectory of interest rates. The minutes will be published on Wednesday.
GBP/USD Weekly Outlook: Brexit Concerns to Hold Sterling in Vice-Like Grip The next week is expected to bring some bigger movements again and the pound might decline back below the psychological level of $1.40.
The UK macroeconomic calendar starts on Tuesday when inflation figures for March will be released, including CPI, PPI and RPI numbers. Inflation is expected to improve marginally and the data will be of a major importance for sterling traders.
On Thursday, the Bank of England is projected to leave monetary policy unchanged and the main rate should stay at 0.5%, with the annual pace of QE expected to stay at £375 billion. Moreover, all nine monetary policy committee members should vote unanimously for these measures to stay unchanged.
The pair remains extremely volatile and has been jumping up and down in the previous weeks as the uncertainty surrounding Brexit haunts the pound, but on the other hand, the unexpected dovishness by the Federal Reserve (Fed) has undermined the greenback. This trend will most likely continue in the days ahead.
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