Daily Economic Commentary: United Kingdom

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.

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!

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 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!

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 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.

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!

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!

Tough luck for the pound bulls, as they simply couldn’t sustain the momentum gained from the previous couple of trading days. GBP/USD basically gave back all of its Thursdays gains, as it ended the day trading around 1.5350. What could be in store for us this week?

No biggies for today, so we may see GBP/USD price action stick in consolidation mode.

Watch out though, as we’ve got tons of red flags headed our way throughout the week. The monthly CPI, employment, retail sales, and the latest MPC meeting minutes are all scheduled for release, so make sure you check in regularly for my two pips on each of the reports.

Ka-pow! Like most of the higher-yielding majors, the pound took a hit from the dollar and the yen in yesterday’s trading. GBP/USD fell from an intraday high of 1.5386 to close the day with a 58-pip loss at 1.5282. Meanwhile, GBP/JPY was down 278 pips at 147.91.

The lack of economic reports left the pound vulnerable to market sentiment. Unfortunately for the currency, risk aversion dominated the markets following the disappointing figures from China.

But don’t fret! Today the U.K. CPI report for March will be released at 8:30 am GMT. If you still remember, the BOE has been recently expressing their worry for inflation. If the figure for march tops the forecast at 2.8%, we could see the pound rally against its counterparts as it would give the central bank one more reason not to increase asset purchases.

Don’t miss the report, ayt?

That’s what I call a comeback baby! The pound bulls ended the day on a strong note, allowing GBP/USD to finish at 1.5375, a solid 94 pips above its opening price. Could we see more of the same today?!

As it turns out, the U.K. CPI report turned out to be a real snoozer, as it came in right in line with expectations at 2.8%. Keep in mind that this is right near the top of the Bank of England’s target band, although the central bank does want to get inflation to a more manageable 2% level.

Speaking of the BOE, the minutes of the latest BOE meeting will be available today at 8:30 am GMT. This report should reveal what was discussed at the last meeting. Take note that policymakers have cited high inflation as a reason why they are reluctant to pull the trigger on additional bond purchases. Let’s see if they’re sticking to that stance or whether they are moving closer to adding more easing measures to the U.K. economy.

Also scheduled for release at 8:30 am GMT will be the claimant count change report. Expectations are that there was no change from the number of people filing for unemployment benefits last month, but looking at past results, we can see that this report often misses initial forecasts. Should we see a huge negative number (indicating less people filing for claims), it could provide the pound bulls the juice they need to sustain their momentum.

Talk about having a tough day! The pound gave up ALL of its gains on Tuesday (and much more!) to the dollar. After GBP/USD opened at what turned out to be its intraday high at 1.5375, the pair dropped like a rock to close at 1.5240.

What caused the pound sell-off? It was none other than the U.K. jobs reports.

According to data released by the Office for National Statistics, claimant count change fell lower for the fifth month in a row. For March, it clocked in a 7,000 decline in the number of people filing for unemployment benefits.

While that was good news, the rise in the unemployment rate overshadowed whatever positive vibes that the claimant count report might have been inspired. The percentage of the U.K.'s work force that is actively looking for a job but couldn’t find one is now up at 7.9% from 7.8%. Yikes!

Today, the retail sales report for March will be on tap for the pound and chances are, it will cause a bit of volatility on the charts. The report is due at 8:30 am GMT and it is eyed to come in at -0.7%. A worse-than-expected figure could send the currency even lower. So make sure you don’t miss it!

Weak retail sales? No problem! The pound got a breather from its losses yesterday when the currency bears ran out of steam. Cable even closed 42 pips higher than its open price while Guppy recovered from its intraday low at 148.75 end closed at 150.08. Phew!

As if the weak employment numbers weren’t enough to hint at the U.K. economy’s weakness, a retail sales report printed yesterday also revealed that customer purchases had declined by 0.7% in March instead of rising by 2.1% like it did in February. Apparently, the cold weather limited the consumers’ urge to buy their favorite goods.

The weak data didn’t rain on the pound bulls’ parade though! After initially dropping at the release, the pound recovered against almost all its counterparts in the later trading sessions.

Will traders continue to drive the pound higher? No data is scheduled for release today, but the IMF and the G20 countries are having their weekend meeting starting in a couple of hours. Watch out for any speeches that might influence the price action of high-yielding currencies!

The pound went down swingin’ with a 49-pip loss against the dollar in Friday’s trading. GBP/USD rallied at the start of the day but lost its momentum during the London session. By the day’s close, the pair was down to 1.5233.

No reports were released from the U.K. which left the pound at the mercy of market sentiment. Unfortunately for the currency, risk appetite waned as political instability continued to cloud Italy’s outlook, and as traders took profit ahead of the G20 meetings over the weekend.

Our forex calendar still doesn’t have anything on tap for the pound today. But don’t worry! The GDP report for Q1 2013 will be released on Thursday and could provide the pound with a clearer direction on the charts.

Until then, you may have to continue gauging market sentiment in order to get a feel for the currency’s behavior. Good luck!

Thanks to encouraging comments from both the IMF and the World Bank, Cable was able to stage a very respectable rally yesterday. It opened the day at 1.5234, rose to an intraday high at 1.5292, and then finally settled at 1.5282.

In a television interview, IMF Chief Christine Lagarde said that global growth was not performing up to par. She singled out Britain, saying that it might be a good time for the country to cut down on austerity measures due to the recent weakness in its economy.

No data was released yesterday but we’ve got a few tier 2 reports on the docket today. At 8:30 am GMT, U.K.’s figures on public sector net borrowing will be published. It’s expected to show a 14.3 billion GBP figure, up from the previous month’s 4.4 billion GBP. Then, at 10:00 am GMT, the CBI Industrial Trends survey will come out. A reading of -14 is projected, which slightly higher from the month prior’s -15.

Both these reports do not normally have a strong impact on price action, but it’s still worthwhile to keep tabs on them. After all, it’s always better to be safe than sorry!

Both the pound bulls and bears got busy yesterday as they considered the U.K.’s grim reports and the overall risk aversion in the euro region. GBP/USD slipped by 40 pips but EUR/GBP also fell by 19 pips.

It would’ve been an easy decision for pound traders if they had only considered the U.K.s reports. The government’s borrowing might have narrowed to 15.1 billion GBP from 16.7 billion GBP a year ago, but the CBI industrial order expectations also fell to a -25 reading, a lot lower than the previous -15 figure.

The pound wasn’t the ugliest duckling in the pond though. The euro took steep hits against its counterparts, which prompted some pound bulls into action.

Will the U.K.’s reports continue to print mixed results? At 8:30 am GMT today we’ll see the BBA mortgage approvals, which is expected to show slight improvement from last month’s release. Then, at 10:00 am GMT the CBI realized sales will be printed. The report is expected to print an index reading of 7 in March (above 0 indicates higher sales volume), but keep an eye out for any surprises!

Despite the weaker-than-expected Distributive Trades Survey, Cable still managed to climb higher yesterday. It opened the day at 1.5242, rose to an intraday high of 1.5289, and then closed the U.S. trading session at 1.5265.

The Distributive Trades Survey disappointed and printed a reading of -1. The market had initially expected a reading of 7. This meant that sales volume of retailers and wholesalers are declining. In other economic news, the BBA Mortgage Approvals report came in line with forecast. It showed that the number of new mortgages approved by the BBA-represented banks rose to 31.2K in March from 30.6K.

Today, Cable’s price action will be determined by the upcoming preliminary Q1 2013 GDP report. It’s projected to show that the U.K. avoided a recession by growing 0.1%. If forecast doesn’t hold and the GDP turns out to be negative, it will put U.K. in a technical recession, which will likely be bearish for Cable.

Ha! Who’s the loser now? The pound blasted above its counterparts yesterday when the U.K.’s GDP report came out better than many had expected. Cable popped up by a nice 165 pips while Guppy also enjoyed a nice 132-pip rally.

Yesterday the U.K.’s much awaited quarterly GDP report printed a 0.3% growth, which was a relief considering that analysts were only expecting a 0.1% reading.

What made the report even more significant though, was that it means that the U.K. has temporarily dodged a triple-dip recession. Recall that a negative reading would have put the U.K. in a technical recession given that economic activity had shrunk by 0.3% in the last report.

The U.K. won’t be releasing any economic data today, so you might want to keep your eyes on other major events that could influence the high-yielding currencies’ price action. I bet the BOJ’s monetary policy announcement today and the U.S. GDP data at 12:30 pm GMT would at least get the attention of the pound bulls and bears!

The party ain’t over yet! GBP/USD continued to rally on Friday as the pair climbed close to the 1.5500 major psychological level. From there, cable got stuck in consolidation for the rest of Friday’s New York session until the start of this week. Will it head any higher?

Although sentiment for the pound was still very bullish on Friday, the lack of any top-tier data from the U.K. kept GBP/USD from making further headway. Weaker than expected U.S. GDP did provide the pair a bit of support as the smaller than expected 2.5% expansion triggered a brief dollar selloff.

For today, there are no major reports from the U.K. so it’s likely that GBP/USD could continue to move sideways below 1.5500. The action might pick up later on in the week as the U.K. will start releasing PMI figures starting on Wednesday.

Party’s over, boys! The pound failed to secure a three-peat against its counterparts yesterday as GBP/USD capped the day near its open price while GBP/JPY fell by 10 pips and EUR/GBP shot up by 37 pips. What gives?

Blame the U.K.’s reports! With not much major data scheduled yesterday, it was easy for pound traders to focus on the GfK consumer confidence, which fell from -26 to an index reading of -27 in April. Will the pound recover some of its losses today?

At 8:30 am GMT the individual lending report is due for release. It will be printed around the same time as the mortgage approvals data, which is also expected to print slightly lower than last month’s figure. Be careful though, as a lot of second tier data are scheduled from the euro zone today. Watch them closely and see if they will affect appetite for high-yielding currencies!