Daily Economic Commentary: United Kingdom - Page 96
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Thread: Daily Economic Commentary: United Kingdom

  1. #951
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    Default April 1, 2013

    As expected, with most major banks out on holiday, Friday turned out to be a very slow day in terms of price action. Cable exhibited little volatility as it paced back and forth in a 50-pip range. The currency pair found resistance at 1.5220 and support at 1.5180.

    U.K. banks will remain closed today in observance of Easter, which means we could see Cable move horizontally once again. It’s also important to note that the economic data cupboard is also empty today. Looking further ahead into the week, however, we’ve got a few tier 1 events scheduled to happen.

    Tomorrow, at 8:30 am GMT, the U.K. Manufacturing PMI will be published. It’s expected to print a reading of 48.9, slightly higher than last month’s reading of 47.9. Then on Wednesday, the Construction PMI will be released. For that survey, the forecast is a reading of 47.7, which is also an increase from the prior month's reading of 46.8.

    On Thursday, the Services PMI and the BOE’s interest rate decision are scheduled. For the Services PMI, market participants are anticipating a reading of 51.4, up from the previous month’s 51.8. For the BOE rate decision, they widely believe that the central bank will hold rates at 0.50% and keep the asset purchase facility at 375 billion GBP.

    Since risk sentiment has been the driving force behind price action in the last few days, better-than-expected results on the reports I mentioned will probably lead to bullish rallies on Cable.
    Last edited by Pipcrawler; 03-31-2013 at 11:22 PM.
    "The only cable I watch is the pound baby."

  2. #952
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    Default April 2, 2013

    With the U.K. out on a banking holiday, the pound’s price action was dependent on movement from the other currencies. Dollar weakness boosted GBP/USD by 34 pips while yen strength dragged GBP/JPY by a whopping 103 pips.

    Will we see a more cohesive direction from the pound pairs today? At 8:30 am GMT the U.K. will print not only its manufacturing PMI but also its individual lending and mortgage approvals data. Analysts will pay close attention to these reports because many are still cautious about the U.K.’s recovery despite the upside surprises that we’ve seen in some major reports. Right now the U.K.’s manufacturing PMI is expected to jump to 48.9 after showing a 47.9 reading last month.

    Good luck and good trading, homies!
    Last edited by Pipcrawler; 04-01-2013 at 10:54 PM.
    "The only cable I watch is the pound baby."

  3. #953
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    Default April 3, 2013

    Oh, the bloodbath! The pound got heavily beaten during yesterday's trading with GBP/USD falling close to the 1.5100 handle and GBP/JPY tumbling to the 141.00 mark. What the heck happened and will the pound have a chance to recover today?

    Weaker than expected U.K. manufacturing PMI is to blame for the pound's massive selloff during the London and New York sessions yesterday. The actual figure climbed from 47.9 to 48.3, below the consensus at 48.9, which meant that the contraction in the industry was worse than estimated. Remember that BOE officials are currently keeping close tabs on business surveys before they come up with their interest rate decision later this week.

    It didn't help that the U.K. also suffered a significant decline in mortgage approvals for the month of February as the figure dropped from 54K to 52K, its lowest reading since September 2012.

    Another business survey that could have a huge impact on pound price action is today's construction PMI reading. The report could show that the contraction in the industry slowed down as the figure is slated to rise from 46.8 to 47.8. If the actual result disappoints again though, GBP/USD could break below the 1.5100 handle and possibly reach the 1.5000 major psychological level. Keep an eye out for the actual report due 9:30 am GMT.
    "The only cable I watch is the pound baby."

  4. #954
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    Default April 4, 2013

    Not bad, pound bulls! The pound might have weakened against most of its counterparts but it had also posted gains against the Greenback. Guppy slipped by 47 pips but Cable shot up by 32 pips. What’s ahead for the pound today?

    Let’s see if the Asian session traders will react to the miss in construction PMI yesterday. After all, the data came in at 47.2 when analysts were expecting a 47.7 reading. Never mind that the previous reading was at 46.8!

    At 8:30 am GMT today we’ll see the services PMI report. Market players are looking for a 51.4 reading, which is slightly lower than the previous month’s 51.8 figure. A big miss could weigh on the pound, especially since many are getting skeptical over the U.K. economy’s economic recovery lately.

    At 11:00 am GMT we’ll also hear from the BOE folks as they print their monetary policy decision. Right now many are expecting the Monetary Policy Committee (MPC) to keep its interest rates and asset purchases steady. This could be a non-event for the pound since there would be no press conference following the decision (unless they actually change something).

    A lot of traders are watching these reports today so don’t even think of missing it!
    Last edited by PipDiddy; 04-03-2013 at 10:06 PM.
    "The only cable I watch is the pound baby."

  5. #955
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    Default April 5, 2013

    My, my! What a rally by the pound! GBP/USD climbed all the way back above the 1.5200 major psychological level during yesterday's trading while GBP/JPY skyrocketed to the 146.00 area. What the heck caused those rallies?

    Stronger than expected U.K. services PMI turned the frowns upside down for the pound pairs as the figure for March came in at 52.4, up from the previous month's 51.8 reading and higher than the estimated 51.4 figure. This reveals that the expansion in the services sector strengthened last month.

    On top of that, pound traders were also relieved to find out that the BOE didn't make any changes to its monetary policy. The minutes of their recent meeting should shed more light on the policymakers' assessment of the U.K. economy and their outlook for the near term, but it's pretty clear that they believe the British economy will be able to get by even without additional stimulus.

    Only the Halifax HPI is set for release from the U.K. today and this report should give a picture of how the housing sector is faring. House prices are expected to have ticked up by 0.2% in March, weaker than the 0.5% increase seen in February. A smaller than expected increase or a drop in house prices might force the pound to return some of its recent gains.
    "The only cable I watch is the pound baby."

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    Default April 8, 2013

    The rally continues! For the third straight day, GBP/USD finished above its opening price as it posted a 102-pip gain to end the week. Will the pound continue to dominate this week?

    Although the Halifax HPI revealed that the increase in house prices ticked down from 0.5% to 0.2% in March (as expected), the pound had no problems appreciating against the dollar.

    Word on the street is that the pound got a boost from MPC member Spencer Dale. He claimed that the recent improvements in the labor market have left policymakers scratching their heads. He also added that he doesn't think it's wise to surprise the markets with changes in monetary policy, which means that the BOE may drop hints and manage expectations long before it makes its next policy move.

    We've only got a couple of minor reports coming out at 11:01 pm GMT today. The BRC retail sales monitor is due, and it'll be interesting to see if sales growth increased from the 2.7% surge we saw in February. Meanwhile, the RICS house price balance report is set to show a 4% decline in house prices for the month of March, which isn't exactly the best follow-up to February's 6% slide.

    If you're looking to play more notable reports, you'll have to wait until Tuesday, when the U.K. publishes its manufacturing production and trade balance figures. 'Til then, y'all should sit tight, homies!
    "The only cable I watch is the pound baby."

  7. #957
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    Default April 9, 2013

    After consolidating above 1.5300 for most of the day, GBP/USD sold off during the U.S. session and reached the 1.5250 area. GBP/JPY, on the other hand, moved sideways between 150.75 and 151.50. What's in store for the pound today?

    Earlier today, the U.K. reported a 1.9% increase in its BRC retail sales monitor for March, following the previous 2.7% growth. This means that the increase in same-store sales at the retail level slowed down recently. Meanwhile, the RICS house price balance showed a 1% decrease, better than the projected 5% drop, which means that less surveyors are posting house price declines in their area.

    Later on, the U.K. will print its manufacturing production figure for February and possibly post a 0.4% rebound from the 1.5% decline seen last January. Also due today is the U.K. trade balance for February, which is projected to show a wider deficit of 8.7 billion GBP from the 8.2 billion GBP in the previous month. Keep an eye out for those reports due 9:30 am GMT as these could trigger a pound selloff if the actual figures miss expectations.
    "The only cable I watch is the pound baby."

  8. #958
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    Default April 10, 2013

    The pound continued to make headway against the U.S. dollar and the Japanese yen yesterday as GBP/USD inched up to the 1.5300 major psychological level while GBP/JPY reached a high of 152.40. Will the pound continue to rack up the gains today?

    Economic data from the U.K. was as mixed as a bag of nuts yesterday as the manufacturing and industrial production reports came in strong while the trade balance missed expectations. Manufacturing production is up by 0.8%, better than the expected 0.4% increase, but the previous figure suffered a downward revision. Industrial production recovered by 1.0% after dropping by 1.3% in the previous period. Meanwhile, the trade deficit widened from 8.2 billion GBP to 9.4 billion GBP, larger than the estimated 8.7 billion GBP shortfall.

    There are no reports due from the U.K. today so the pound might be in for quiet trading for the rest of the day. If you're trading GBP/USD, don't forget to take a look at the FOMC meeting minutes set for release during the U.S. session as this could spark volatility for the pair.
    "The only cable I watch is the pound baby."

  9. #959
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    Default April 11, 2013

    Not much action for pound pairs yesterday, as no U.K. data was released. GBP/USD stayed within range, while EUR/GBP dipped slightly. Will we see a repeat performance in today’s action?

    The only bit of significant news that came from the U.K were comments made by MPC member David Miles, who said that the Bank of England needed to implement even more aggressive monetary policy in order to boost growth for the economy. Not much of a surprise here, as Miles is one of the policymakers who voted in favor of more bond purchases.

    No hard data on tap once again today, so we may see more of the same type of consolidation on pound pairs. Nevertheless, pay attention to what’s happening in the euro zone or in the U.S., as you never know what might rock the markets!
    "The only cable I watch is the pound baby."

  10. #960
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    Default April 12, 2013

    Soarin'! Despite the lack of economic reports from the U.K., it would seem that the pound didn't have any trouble finding demand in yesterday's trading. It finished the day higher at 1.5389 after opening at 1.5325 against the dollar. Meanwhile, against the yen, it closed with a 43-pip win at 153.37.

    There still isn't anything on tap from the U.K. today. However, the U.S. retail sales report is scheduled to be released and euro zone finance ministers will start their meetings. Keep tabs on these events because they may just spark volatility on the charts that could move the pound!
    "The only cable I watch is the pound baby."

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