Daily Economic Commentary: United Kingdom

All good things come to an end, don’t they? At least that’s what the British pound was thinking on Friday! After consecutive rallies, pound pairs chalked up a large decline as GBP/USD tumbled below the 1.6100 handle while GBP/JPY sank to a low of 155.80.

There were actually no reports released from the U.K. last Friday, but it appears that traders started doubting the economic recovery in the country. After all, PMI reports released from the manufacturing, construction, and services industry earlier in the week all came in short of expectations.

There are no reports due from the U.K. today so it will be interesting to see whether the pound can be able to recover or not. Traders could start pricing in expectations for the BOE interest rate decision later on in the week so y’all better stay on your toes!

Finally, a breather! With no major driver in the markets, the pound traders paid attention to the U.K.’s better-than-expected reports. GBP/USD was able to snatch a 67-pip gain while GBP/JPY and EUR/GBP also showed pound strength.

The U.K.’s BRC retail sales monitor only showed a 0.7% growth against last month’s 1.8% increase, but the RICS house price index more than made up for the disappointing data. The report showed that 54% of surveyors saw house price increases. If you remember, the report only clocked in at 41% last month.

Only the BRC shop price index at 11:00 pm GMT is on tap today, so watch out for other major news that might affect risk sentiment!

What in the world…? Pound pairs seemed to have a brief moment of panic yesterday, as GBP/USD suddenly spiked to a low of 1.6020 before recovering back above 1.6100 while GBP/JPY tested support at 155.50. What the heck happened there?!

As it turns out, an erroneous news report stating that the BOE implemented additional LTRO led to a sudden pound selloff. A few heart-stopping moments later, traders realized that it was just a routine repo operation completely blown out of proportion. Whew!

For today, the pound could be in for more action with the U.K. manufacturing production, BOE credit conditions survey, trade balance, and industrial production data all up for release. Manufacturing production is eyeing a 0.3% uptick while industrial production could show 0.2% growth after staying flat in the previous month.

Bear in mind that stronger than expected data could allow the pound to resume its rallies against its counterparts, even though last week’s set of PMI reports cast some doubts on the U.K. economic recovery. Weak data, on the other hand, could trigger a sharp selloff so stay on your toes!

K.O.! The pound got knocked out by its major counterparts yesterday as some major UK reports came out worse-than-expected. GBP/USD, GBP/JPY, and even GBP/AUD ended up in the red while EUR/GBP extended its gains.

The pound started weakening in earnest when the U.K.’s manufacturing production showed a 1.2% drop instead of the expected 0.3% uptick. The day didn’t get any better when traders also saw that the nation’s trade balance numbers are way below expectations with a 9.6 billion GBP deficit against 8.9 billion GBP deficit estimates.

The numbers hinted that the U.K.’s recovery isn’t firing on all cylinders and that the BOE was right to keep its present stimulus programs in place.

Will the pound bulls get a breather today? The MPC is expected to announce their monetary policy decision at 11: 00 am GMT. While many aren’t expecting any changes, market players are looking for a possible accompanying statement that would give hints on the central bank’s next moves.

Good luck trading today, kids!

Bo-ring! GBP/USD’s movement was a snoozer yesterday, as the pair cruised around the 1.5950 minor psychological support. Should we expect a breakout soon?

The BOE decided to keep monetary policy unchanged as expected, maintaining its asset purchases at 375 billion GBP and its interest rate at 0.50%. Since this was already priced in, traders barely reacted to the actual release as many are probably waiting to see the minutes of the meeting before placing their bets on the pound.

Only the CB leading index is up for release from the UK today and a small uptick is expected, which might be enough to keep the pound supported against its counterparts for the day. Be mindful of potential profit-taking ahead of the weekend though!

Looks like the pound stopped being the golden boy of the currency markets! Although GBP/JPY showed pound strength, the currency didn’t fare so well with GBP/USD and EUR/GBP. What’s up with that?!

Last Friday the CB leading index showed a 1.2% uptick, which is a lot better than last month’s 0.7% increase. Unfortunately, traders were busy shorting the pound as the currency’s correction extended until that day.

Will the pound have a chance at regaining pips this week? The economic cupboard is empty for today but prepare for the inflation and PPI reports tomorrow; the employment numbers on Wednesday, and the retail sales report on Thursday. These are all potential big hitters, so don’t even think about passing up pound trades this week!

No economic reports from the UK meant a pretty tight trading day for the British Pound against most of the majors. Against the Greenback, there was quite a bit of choppiness, but it was held within a 65 pip range and closed the session near the day open at 1.5982.

Today’s price action may be a little more interesting with major tier one data in the form of the UK’s year-over-year CPI read (forecast at 2.6% vs. 2.7% prev.). We’ll also get reads from PPI Input m/m, RPI y/y, and HPI y/y at the same time as the CPI release.

Finally, MPC Member Weale is set to speak before the Treasury Select Committee in London, and while no hints of new monetary policy is expected, it is good to be aware of.

Consolidation was the name of the game for GBP/USD yesterday, as the pair found support around 1.5920 and resistance at 1.6000. Will it be able to make a breakout today?

Inflation reports from the U.K. were stronger than expected, with the headline CPI showing a 2.7% increase versus the consensus of 2.6% and the core CPI printing a 2.2% rise. This was enough to convince some traders that the BOE might be closer to reducing its stimulus sooner rather than later, which explains why the pound was able to stay resilient against the U.S. dollar.

U.K. jobs reports are up for release today so y’all better brace yourselves for some rocky price movement! The claimant count change is slated to show a 24.3K drop in claimants, which might be enough to keep the U.K. jobless rate steady at 7.7%. Stronger than expected figures could allow GBP/USD to break above 1.6000 while weaker than expected data might trigger a downside break so watch out for the actual release at 9:30 am GMT.

Now you see it, now you don’t! Just when we thought that the bulls would have their momentum from positive U.K. reports, the pound showed mixed price action instead. What’s up with that?!

Yesterday the U.K. released its employment numbers, which showed the unemployment rate at 7.7% as expected and the change in claimant counts at -41K, its largest drop since 1997.

So why didn’t we see a stronger pound rally? Well, details of the report revealed that the average hourly earnings only increased by 0.7% instead of the expected 1.0%. With the U.K.’s inflation at above 2.0%, consumer prices are basically rising faster than wages are. This could hurt household consumption in the long run.

Another possible reason is that we saw risk sentiment take over the markets during the U.S. session. As I mentioned in my USD update, investors loved it when hints of a debt ceiling deal made its way to the market grapevines.

Will the pound get its rally today? The U.K.’s retail sales report is due at 8:00 am GMT and is expected to show a 0.5% uptick after dropping by 0.9% in last month’s report. Good luck and good trading, kids!

Has the pound been on a new diet these days? Pound pairs seemed to have lost some weight and had an easier time floating up the charts, with GBP/USD hitting a high of 1.6173 and GBP/JPY soaring past 158.00. Is the pound in for more gains?

Better than expected U.K. retail sales was one of the main reasons why the pound was able to rally yesterday, as the report showed a 0.6% increase versus the estimated 0.5% rise. This was also a decent rebound from the previous month’s 0.8% decline, revised up from the initially reported 0.9% drop. Strong consumer spending figures mean good prospects for overall economic growth, which supports the BOE’s relatively hawkish outlook.

Another factor that boosted the pound yesterday was the risk rally spurred by news that U.S. lawmakers have finally passed a bill on extending the debt ceiling deadline and allowing the economy to avoid a default. This also means that the U.S. government shutdown is over!

The U.K. economic schedule is empty for today, which suggests that pound trading could depend on market sentiment. Stay on your toes for potential profit-taking as well!

Has the pound lost its charm? The pound bulls quickly went got off their post retail sales high as they pushed the currency in mixed directions. Does this mean that data-induced rallies are a thing of the past?

Not exactly. As I mentioned in my other updates, the markets just weren’t feeling like pushing the currencies in any definite direction while they’re processing the impact of the latest government shutdown and debt ceiling resolutions.

The U.K. isn’t scheduled to release economic reports today so watch out for Greenback sentiment and any news that might affect risk appetite!

Too fast, too furious? The British pound had enough of its sharp rallies that it edged lower against the dollar and moved sideways against the Japanese yen. GBP/USD slid under the 1.6150 handle while GBP/JPY was stuck around the 158.50 area.

There were no top-tier reports released from the U.K. yesterday, leaving the pound with no fuel for further rallies. The only report printed from the U.K. was the Rightmove HPI, which showed a 2.8% rebound in house prices from the previous 1.5% decline.

The U.K. is set to release its public sector borrowing figure for September at 9:30 am GMT today and possibly show a smaller figure of 10.4 billion GBP compared to the previous 11.5 billion GBP. A lower reading is generally positive for the pound, as it shows that the government incurred a smaller public debt for the period.

However, the reaction to this report might pale in comparison to the potential fireworks from today’s NFP release, which might drive dollar pairs into a frenzy during the U.S. session. A stronger increase in hiring is projected for September but a disappointing result might trigger another round of dollar-selling. Stay on your toes!

What a coup by the bulls! Thanks to overall risk appetite and a positive U.K. data, the pound ended the day in the green against the dollar and the yen. It wasn’t as lucky against the higher-yielding currencies though. What’s up with that?!

Yesterday we saw the U.K.’s public sector borrowing come in at 9.4 billion GBP, which is smaller than the previous month’s 10.8 billion GBP reading. It also helped the pound that a weak NFP report during the U.S. session boosted the higher-yielding currencies across the board.

Still, as seen in pairs like GBP/AUD and EUR/GBP, the pound is struggling to post gains against other higher-yielding currencies. Will that change today?

At 8:30 am GMT Mark Carney and his gang will publish the results of their votes on the BOE’s asset purchases and interest rates. More importantly, traders will pay attention to any signs that the BOE has lessened its optimism from last month before we saw disappointments in the U.K.’s reports.

Prepare well for your GBP trades today, kids!

Why, thank you BOE! Upbeat remarks from the British central bank helped the pound recover from its recent selloff, as GBP/USD bounced from a low of 1.6127 back above the 1.6200 mark and GBP/JPY managed to hold on to the 157.50 mark.

The minutes of the latest BOE monetary policy meeting revealed that policymakers were feeling optimistic about the U.K. economy’s prospects, as officials upgraded their growth forecasts. They also predicted that joblessness will fall faster than initially estimated, prompting several traders to foresee a rate hike as early as 2015. As expected, the votes to keep interest rates and bond purchases unchanged for the meantime were unanimous.

Up ahead, the U.K. is set to print its CBI industrial orders expectations for October. The reading is projected to climb from 9 to 10, which reflects higher volume expectations for the month. If you’re trading pound pairs, make sure you keep tabs on the actual release at 11:00 am GMT. Good luck!

Slow and steady wins the race! A weaker-than-expected U.K. report had no fight against the pound bulls’ resilience as they pushed the currency higher against the dollar, euro, and the yen.

Yesterday the U.K.’s CBI industrial orders expectations report caused mini heart attacks among the pound bulls when it showed a -4 reading when many had estimated the report at 10.

Luckily, Mark Carney came to the rescue some time around the U.S. session when he hinted that the BOE would continue stimulating the economy by lending for longer periods, accepting a wider range of collateral, and even cutting its discount window rate.

Today’s another big day for the pound as we see the U.K.’s GDP numbers for Q3 2013. With the country’s economic reports coming in better-than-expected lately, I wouldn’t be surprised if the GDP report also prints to the upside.

Mayday, mayday! The pound plummeted on Friday, taking GBP/USD from a high of 1.6248 to a low of 1.6150. GBP/JPY, on the other hand, struggled to hold on to the 157.50 minor psychological handle. What’s in store for the pound today?

U.K. GDP for the third quarter of the year came in line with consensus at 0.8%, slightly higher than the previous quarter’s growth figure, which enjoyed an upward revision from 0.6% to 0.7%. However, pound traders still didn’t seem to be satisfied with the small expansion in the economy. Perhaps they’re waiting for more convincing signs that the rebound has momentum.

The only release on the U.K.'s schedule for today is the CBI realized sales figure, which is due 12:00 pm GMT. The report could show a drop from 34 to 33 for October, which would mean that sales volume declined slightly for the month. Another event to watch out for is MPC member Dale’s speech at 2:20 pm, as it could cause volatility for pound pairs. Stay on your toes!

The pound got a big “L” stamped on it yesterday as it lost to its major counterparts. Heck, GBP/USD, EUR/GBP, and even GBP/JPY showed weaknesses!

With the U.K.’s CBI realized sales numbers surprising to the downside, who could blame the bears from attacking? The report printed a reading of 2, which is a heck of a lot weaker than the downtick from 34 to 33 that market geeks had been expecting. Apparently, grocers aren’t feeling too optimistic over the industry’s growth after already showing three months of consecutive gains.

Today’s another big day for the pound as the individual lending numbers is due at 10:30 am GMT, along with the mortgage approvals report. Both reports are expected to show better numbers than last month, but don’t discount the possibility of downside surprises!

Oh bloody hell! Cable took another nasty tumble in yesterday’s trading, as the pair broke below the 1.6100 major psychological support and reached a low of 1.6024. GBP/JPY also had its share of losses but was able to bounce of support at 157.00.

Data from the U.K. was mixed, with the net lending to individuals data showing a weaker than expected 1.5 billion GBP reading versus the 2.5 billion GBP estimate and the mortgage approvals figure coming in slightly higher than the consensus of a 65K increase.

There are no reports due from the United Kingdom today so it could be all about risk sentiment driving pound price action. If you’re planning on trading GBP/USD, don’t forget that the FOMC is set to make its monetary policy statement in today’s U.S. session so y’all better brace yourselves for potential fireworks then!

Thanks to the lack of reports from the U.K, the pound’s price action was as mixed as costumes in a Halloween party. GBP/USD lost 10 pips while GBP/JPY ended the day 61 pips higher than its open price.

We didn’t see any news data from the U.K. yesterday, so the pound danced to the tune of risk appetite. Unfortunately for the pound bulls, traders bought the dollars ahead of and at the release of the FOMC statement.

Only the Nationwide house price index at 8:00 am GMT is scheduled for today, so you might want to look at other major news releases for possible news trade opportunities.

Still holdin’ like a boss! The 1.6000 major psychological level refused to give way to GBP/USD, as the pair managed to stay above this support area for the entire trading day. GBP/JPY, on the other hand, edged a little lower as it dipped to a low of 157.28. What’s in store for the pound today?

U.K. data came in stronger than expected yesterday, with the Nationwide HPI report printing a 1.0% increase in house prices for October. This is higher than the estimate of a 0.7% uptick and the previous month’s 0.9% increase.

Up ahead, we have the U.K. manufacturing PMI figure up for release at 10:30 am GMT. This is expected to show a decline from 56.7 to 56.3 for October, which would mark its second consecutive monthly drop. An upside surprise could help keep GBP/USD above the 1.6000 mark while a weaker than expected reading could trigger a sharp breakdown. Better keep tabs on this report if you’re trading the pound!