Although the pound got away with only a 17-pip win from the dollar on Friday, don’t think that trading was easy-breezy for the pound bulls! After getting rejected at 1.6250, GBP/USD tumbled to its intraday low at 1.6167. Good thing the pair found enough support and it bounced back to peak at 1.6304 before ending the day at 1.6249.
On the other hand, EUR/GBP dropped like a rock to .8712 from an intraday high of .8839 as investors worried about Greece’s fiscal situation.
Our forex calendar shows that we don’t have a lot of high-caliber economic reports to sink our teeth into this week. Only public net sector borrowing (Tuesday at 8:30 am GMT), revised GDP (Wednesday at 8:30 am GMT), and Nationwide HPI (Friday at 6:00 am GMT) reports are due this week.
So you may want to make sure you get a good feel of the market’s mood before you enter your trades. Remember that the pound usually doesn’t do well against lower-yielding currencies in times of risk aversion.
If you’re planning to buy the pound, you may want to keep your fingers crossed for the public net sector borrowing report to print a surplus bigger than the 4.8 billion GBP forecast tomorrow. Good luck!
What a bummer! Cable started the week on a very weak note as the Greek debt debacle continued to dominate the headlines yesterday. Cable, after it had opened the day at 1.6229, fell more than 100 pips to end the U.S. trading session at 1.6114.
It appears that the market is becoming more and more skittish about the whole situation. The problem with U.K. is that its banks are heavily exposed to Greek debt, so if Greek defaults, the banking sector will also take a big hit. And with the underlying confidence in the U.K. economy still frail, there’s very little reason for investors to put their money in the pound.
The forex calendar shows two important reports from U.K. today.
The first one, the report on public sector borrowing, will be released at 8:30 am GMT. The market expects the report to show that the U.K. government had a 6.5 billion GBP deficit in April, lower than the 16.4 billion GBP deficit seen in March. Higher-than-expected figures are usually considered bearish for the pound, as it meant that the government spent more than it earned.
Following shortly at 10:00 am GMT is the CBI quarterly distributive trades survey. The forecast is a reading of 11, down 10 points from April.
For the time being, it seems that the market is pretty bearish on the pound. This could mean that the pound could sell-off again if the upcoming reports come in worse than expected.
The pound threw its weight around (Hah!) when it posted gains against its counterparts despite a worse-than-expected report from the U.K. Cable ended up with a 79-pip gain at 1.6191, while GBP/JPYalso rose by 51 pips to 132.64. Boo yeah!
Data printed yesterday showed that tax revenue in the U.K. fell by 0.8% in April, while the government’s spending increased to 10 billion GBP, which was a lot higher than the expected 6.5 billion GBP. The high government spending pushed public sector borrowing to 7.7 billion GBP in April, higher than the estimates of only a 5.0 billion GBP deficit.
Good thing that markets were focused on the good news! Aside from a bit of risk appetite in markets, the U.K. also released its realized sales in May, which clocked in at an index reading of 18 when market geeks thought that the post-Royal Wedding spending would drag the data to a reading of 11.
Today all eyes will be on the final figure of the U.K.’s first quarter GDP, which will be released at 8:30 am GMT. Although no change is expected from the data, my forex buddies will be keeping close tabs for any surprises.
Also released at 8:30 am GMT is the BBA mortgage approvals report, which is expected to increase to 32,200 in April from March’s 31,700 figure.
Stay sharp on your trades, kids!
Well, well, guess who turned out to be one of the biggest winners in the forex market yesterday? The pound! Despite softer economic data, the pound still managed to stage a magnificent rally across the board in yesterday’s trading session, gaining 90 pips over the dollar and 83 pips versus the yen.
The BBA Mortgage approvals report came in at 29,400, much weaker than the 32,200 the market predicted. Meanwhile, the Preliminary business investment report for the first quarter showed a 7.1% decline instead of rising 2.4% as expected. The revised GDP report was the only bright spot in the economy, confirming that the economy did indeed expand by a solid 0.5%.
If data weren’t very optimistic, what caused the pound to rally then?
Apparently, the pound’s rise was mainly due to an OECD report. The report said that the Bank of England (BOE) needs higher interest. With inflation in the U.K. significantly above the BOE’s target, this was something pound bulls wanted to hear.
The pound’s rally was mainly the result of firm Q1 exports and an OECD report saying the BOE needs higher interest rates.
Nothing on U.K.’s forex calendar today, but we will be seeing the U.S. GDP report at 12:30 pm GMT. Expect a lot of movement on the pound today, as the GDP report will probably have a hefty impact on the pound’s price action.
The party don’t stop yo! With no economic data to rain on their parade, pound bulls continued to whoop it up on the charts. They pushed GBP/USD up another 112 pips, forming a three white soldiers pattern on the pair’s daily chart.
Pound bulls may not have had any U.K. data to work with, but they went absolutely gaga for the disappointing GDP figure that the U.S. posted! After the results came out, traders quickly abandoned the dollar and jumped aboard the pound bandwagon.
But to tell you the truth, the way the markets have been treating the pound has been interesting to say the least. You’d think that the euro zone’s debt problems would spill over to the U.K. and weaken the pound since U.K. banks are heavily exposed to euro zone debt. But apparently, the markets are treating all of this as a euro zone-centric problem for the meantime.
Today, the pound has been off to a slow start. Even with GfK consumer confidence data coming in above expectations (-21 vs. -31), we haven’t seen much action.
Could this be because the markets are waiting for a bigger report? It could be! After all, the Nationwide HPI is due at 6:00 am GMT. This report has the potential to cause a stir on the charts, so you might want to give it a look. Forecasts have it printing a 0.1% rise after April showed a 0.2% decline.
My my, look at the pound fly! GBP/USD reached a high of 1.6509 last Friday as the U.S. dollar sold off like pancakes on a state fair. In fact, cable jumped by almost 450 pips from a low of 1.6060 last week. Can the pound keep up its winning streak this week?
A better than expected Nationwide HPI figure provided support for the pound last Friday when it printed a 0.3% increase in house prices for May, higher than the predicted 0.1% uptick. The improvement in risk appetite also helped boost the pound, even though the U.K. faced some uncertainties related to euro zone debt concerns.
This week, the economic highlights for the U.K. are the inflation report hearings, the release of the Halifax HPI, and the construction PMI report.
The BOE inflation report hearings are supposed to reveal how the central bank policymakers feel about price pressures and whether their current monetary policy stance is appropriate or not. Bear in mind that it’s the end of the term of BOE policy committee member Andrew Sentance, the biggest hawk in the bunch. If his replacement Ben Broadbent proves to be on the doves’ side, the BOE would be less likely to tighten its monetary policy anytime soon. Make sure you find out how it all turns out during the inflation hearings on Tuesday.
By Wednesday, the Halifax HPI is expected to print a 0.4% increase in house prices, a rebound from the 1.4% decline seen last April. If the Nationwide report came in stronger than expected, we might just see an upside surprise from the Halifax figure as well. If that happens, watch out for more gains from the pound pairs!
Then, on Thursday, the construction PMI will be released. The index is estimated to climb from 53.3 to 53.8 in May, which would indicate that the industry expansion is getting stronger. Better than expected figures could boost the pound even higher but, if the actual reading disappoints, the pound could be forced to return its recent gains.
As yesterday’s bank holidays in the U.S. and the U.K. flushed out almost two-thirds of the usual trading volume, market focus turned to the euro region. But that doesn’t mean that the pound failed to get any action! GBP/USD capped the day 36 pips lower than its open price at 1.6470, while EUR/GBP dipped by 13 pips to .8672.
It looks like the pound bulls and bears might be able to extend their vacation for one more day as there are no economic reports scheduled in the U.K. today.
You might want to watch for news from the euro region though, as word around the street is that the Greek and other EZ officials are having a hard time agreeing to a solution to the region’s sovereign debt crisis. What’s more, the Greenback looks like it’s gaining back its muscles!
Be careful in your trades today, kids!
Boo hoo! The pound got clobbered by the Greenback yesterday as GBP/USD dropped by almost a hundred pips from a high of 1.6548 to close at 1.6451. Against the yen, the pound performed much better as it ended the day 81 pips higher than its 133.30 open price. How will today’s U.K. reports impact the pound?
The U.K. is set to release a bunch of economic data today. First up at 8:30 am GMT is the manufacturing PMI for May, which is expected to dip from 54.6 to 54.2. But don’t go hatin’ on the pound just yet! Recall that the Royal Wedding took place just before May and it could still have a residual impact on the first couple of weeks of the month. With that, stay on your toes for a possible upside surprise which could boost the pound.
Next is the net lending to individuals report, which could show that new credit issued to consumers more than doubled from 0.5 billion GBP in March to 1.1 billion GBP in April. A higher than expected figure could be bullish for the pound pairs because it would imply that consumers are financially confident enough to swipe their credit cards and take on loans. Watch out for the actual report due 8:30 am GMT.
Also due at that time is the M4 money supply and the mortgage approvals data. Both figures are slated to have minimal impact on the pound’s movement but it’d help to keep an eye out for those reports just the same. After all, an increasing money supply could spur inflation, which could lead to an interest rate hike somewhere down the road. Meanwhile, higher mortgage approvals could have a positive effect on future consumer spending.
Dont you mean 9:30am GMT?
No, he means 8.30gmt, which equates to 9.30 british summer time.
Clocks went forward 1 hour on March 27.
And that makes it 0-3! The pound racked up its third loss this week as GBP/USD posted a 112-pip drop following the release of weak manufacturing data. If it keeps this up, it’s likely to get swept just like the Lakers!
The slide in manufacturing activity continues! The U.K. posted another red manufacturing PMI figure yesterday as the index recorded its fifth consecutive drop in May. From a reading of 54.4, it fell to 52.1 last month, far worse than the 54.2 figure that economic fortunetellers saw in their crystal balls. Analysts say the many public holidays in April and May are to blame for disruptions in manufacturing activity. After all, y’all can’t bring home the bacon when you’re out on holiday!
The release of lending figures yesterday also brought the pound down as mortgage approvals fell from 47,145 to 45,166 in April. If people aren’t borrowing money now, what more if the BOE hikes rates! I wouldn’t be surprised if the BOE took this as a sign to hold back on rate hikes.
Later today, the U.K. is due to drop another bomb on the markets – its construction PMI! Will it bring good news or bad news? Well, analysts say the index will probably inch up from 53.3 to 53.7. But keep in mind, the U.K.’s recent reports haven’t exactly been too bullish. As a matter of fact, the construction PMI printed a lower figure in the last two releases, so I wouldn’t be surprised to see this baby print in the red, too. Catch it at 8:30 am GMT, son!
What a topsy turvy day for the pound! After a bit of consolidation below 1.6350, GBP/USD leaped to the psychological 1.6400 handle then landed back at 1.6368. Meanwhile, GBP/JPY tossed this way and that when it found resistance around 132.75 and support at the 132.00 mark. Will pound pairs find a clearer direction today?
The U.K. construction PMI turned out to be good news for the pound when the index climbed from 53.3 to 54.0 in May, surpassing the consensus at 53.7. Although this upbeat figure gave the pound a boost, the currency was forced to pedal back when a BOE policymaker hinted that he’s open to more asset purchases. According to him, weak consumption could lead to a slowdown in the British economy and this would require further stimulus. Yikes!
It will be the services sector’s turn to release their PMI figure for May. The index is expected to climb a notch from 54.3 to 54.4 in May, suggesting that the expansion improved slightly during the month. Bear in mind that the previously released manufacturing PMI fell short of expectations while the construction PMI came in stronger than expected, which means that it’s a toss up for the services industry PMI. Keep your eyes glued to the actual release at 8:30 am GMT if you want to trade the news.
Don’t forget that today is NFP Friday so y’all better read up on my U.S. economic commentary as well as my buddy Forex Gump’s commentary on the upcoming U.S. jobs release. Go grab those pips today!
Well that was no trouble at all! The pound soared up the charts on Friday, taking advantage of the dollar’s weakness following the NFP report. After trading as low as 1.6287, GBP/USD managed to buck its losses and close at 1.6428, good for a 60 pip gain on the day.
The pound bears were actually in control earlier in the day, as the services PMI report came in weaker than expected. The report printed at 53.8, slightly off the anticipated 54.4. While the drop off wasn’t huge, just keep in mind that this was just a few points above the 50.0 mark and marks the second consecutive month that the index fell. Considering that the manufacturing PMI hasn’t been too hot either lately, this indicates that the economy may be hitting a downturn right now.
Looking ahead, we’ve got a whole bunch of red flags coming up this week. Watch out for the inflation report hearings (Tuesday), BOE MPC statement (Wednesday), and manufacturing production (Thursday) data, as these can all serve as catalysts to move the market.
I’m especially interested to see what the BOE has to say about the state of the economy and which way they are leaning with regards to interest rates. Now, I don’t think the BOE is looking to raise rates soon, but hey, you never know when it comes to these central banks!
Busted! With the IMF not impressed with the U.K.’s outlook, the pound took a hit across the board yesterday. GBP/USD fell 63 pips to end the day at 1.6347 while GBP/JPY is now approaching key support levels around 131.00.
Word is that while the IMF approves of the U.K.’s austerity measures, it believes that 2011 may be a rough year for the U.K. The recent string of economic facepalms has caused IMF economists to scale back their 2011 growth projections from 1.7% to 1.5%.
The just released BRC retail sales report supports this notion, as the report showed a decline in retail sales growth of -2.1%. This came after a waxing hot 5.2% figure last month.
In any case, the good news is that the IMF believes that this slump will be temporary and that current monetary policy is appropriate for the economy. Hopefully, they are correct and the U.K. can get back on track soon!
No hard core data on deck today, but don’t let that make you complacent – you never know what data might move the markets!
Weak economic data ain’t no thang to the pound! It shrugged off a negative reading from the BRC retail sales monitor and worse-than-expected results from the Halifax HPI to record a 92-pip gain over the Greenback and a 51-pip gain over the yen.
Finally, the truth has come to light! The BRC retail sales monitor report revealed that retail sales were down 2.1% in May, which is a pretty big drop from the 5.2% rise that April saw. April’s strong sales painted an unrealistically bright picture for the economy, and if you think about it, it was more of a fluke than anything else. After all, there were many holidays within the month that helped boost sales. Remember the Royal Wedding? That event alone brought in thousands of tourists and had people spending dough like it was going out of style!
Sadly, we didn’t get any consolation from the Halifax HPI, which printed a tiny 0.1% rise in house prices, just a fourth of the anticipated figure. It’s been four months in a row now that the HPI has failed to post anything more than a 0.1% rise!
Nothing on the economic calendar today. Consider it the calm before the storm because tomorrow, things get wild! The BOE is due to hold its rate decision tomorrow at 11:00 am GMT, and you all know how crazy that can get!
Wooooo! What a crazy day for the pound! It was all over the place thanks to some “miscommunication” from Moodys! GBP/USD sank to as low as 1.6453 before recovering to close at 1.6397, marking just a 43 pip decline for the day. With some top tier data coming up, what could be in store for Cable today?
Even with no hard data released from the U.K., we saw some wild moves in the pound, primarily due to comments made by Moody’s officials. First, Moody’s said that the U.K. could lose its precious AAA rating because of weak growth prospects and fiscal shortcomings.
And just as quickly as you could say “Sike!”, Moody’s retracted their statement and said that “the U.K.’s outlook is stable.” But by then, the damage was done and pound pairs were trading considerably lower.
In any case though, these comments weren’t much different from what we’ve heard in the past, and this could just be a warning shot at the U.K. government to get its act together.
Today, trade balance data will be available at 8:30 am GMT. The deficit is expected to decline from 7.7 billion GBP to 7.5 billion GBP in April. Not much change, but if the report fails to hit target, it could cause some volatility.
Still, I suspect everybody will be waiting for 11:00 am GMT, when the Bank of England will be releasing its MPC rate statement. Nobody is expecting a rate hike, but you should listen carefully to the accompanying rhetoric. As Forex Gump pointed out in his interest rate decision blog post, it could signal whether what direction the BOE will take going forward.
Like most higher-yielding currencies, the pound fell victim to the dollar’s strength yesterday. Darn! It could have had it all, rolling in the pip-deeps! But GBP/USD fell from an intraday high of 1.6467, closing 24 pips lower from its opening price at 1.6371.
Yesterday the Bank of England left the official cash rate unchanged at .50% and maintained the size of its asset purchase facility at 200 billion GBP. Although the BOE’s decision wasn’t much of a shocker, it didn’t boost the pound up the charts either.
Now I bet everyone is excited for the minutes of yesterday’s meeting. I know I’d want to get dibs on what MPC members have to say about the mixed data we’ve recently seen from the U.K. and if anyone has taken Andrew Sentance’s place as the committee’s uber hawk.
The trade balance report for April also didn’t seem enough to hustle the pound. It printed a trade deficit of 7.4 billion GBP which was 100 million GBP lower than what the market had braced for.
Today will be a busy day for the currency with data on manufacturing and inflation scheduled on our forex calendar from the U.K. At 8:30 am GMT, the manufacturing production report for April will be released. The change in the value of output produced by manufacturers is expected to have been flat during the month, following the 0.2% uptick we saw in March.
The industrial production will also be released and it is anticipated at 0.1%.
To be released along with those reports will be the producer price indices for May. Input prices of materials bought by producers are projected to have declined 1.2% during the month while output prices are seen to print a 0.3% uptick.
Lastly, the BOE will release its report on consumer inflation expectations. Watch out for a figure higher that its previous reading of 4.0% as this would mean that more consumers expect higher inflation pressures. Consequently, it may spur talks of a BOE rate hike.
KABOOM! After sticking within a tight range throughout the week, GBP/USD finally broke through to the downside, falling 134 pips to end the day at 1.6227. Is Cable now headed for recent lows at 1.6060?
The pound took a beating to the behind thanks to poor economic data that was released on Friday. Manufacturing and industrial production fell by 1.5% and 1.7% respectively, after they were expected to come in at 0.0% and 0.1%. This highlights how the economy is struggling and could need more stimulus to get it back on track.
Producer price input figures also came in at -2.0%, a steeper drop than the expected -1.2% decline. A decline in input prices could mean less inflationary pressures, which counters the argument that the BOE needs to raise interest rates to offset rising inflation.
Speaking of inflation, we’ve got the inflation-related red flags coming out this week. On Tuesday (June 14), the consumer price index will be available and is expected to show that inflation is still scorching hot at 4.5%.
Then on Friday, the inflation report hearings will be released. Considering the current pace of the economiy, if we see any indication that inflation has cooled off, it could lead to more speculation that the BOE will not be raising rates. And you know what that could mean – another GBP sell off.
For today, no biggies on the docket, but look out for the RICS house price balance report which is coming in at 11:00 pm GMT. The index is projected to print at -20%, indicating that housing prices are still on the decline. I don’t expect this report to rock the markets too much, but nevertheless, better to know what’s coming out if you’re trading at that time.
After its three-day losing streak, the pound came back in Monday’s trading with a vengeance against the dollar. (evil laugh) GBP/USD skyrocketed to its closing price of 1.6386 almost as soon as it opened at 1.6227. Meanwhile, GBP/JPY ended the day 108 pips higher at 131.42.
Market junkies are saying that high expectations for the CPI report (due later at 8:30 am GMT!) and hawkish comments from BOE MPC member Weale boosted the pound in yesterday’s trading.
The headline inflation figure for May is seen to have remained steady at 4.5% while the core reading is anticipated to come in 0.1% lower than its previous number at 3.6%.
Meanwhile, Martin Weale said yesterday that despite the not-so-sexy figures we’ve seen from the British economy lately, he still believes that the bank should raise rates soon. Boo yeah!
Higher-than-expected inflation figures may just boost the pound on the charts as they would spur talks of an interest rate hike from the BOE, so watch out! But don’t get too excited about the CPI report, okay?
According to the bank’s Quarterly Bulletin, inflation pressures are seen to return to 2% in the long-term despite the recent increase in consumer prices. This is why our central banking chaps in London haven’t been in a rush to tighten monetary policy.
Good luck!
Weaker-than-expected economic data? No problem! Despite the core consumer price index coming in below forecast, Cable was still able to hold its ground and end the day with a very small loss only yesterday. Cable closed the U.S. trading session at 1.6372, just 14 pips lower from its Asian session opening price.
Yesterday, the country’s core consumer price index (CPI) failed to meet forecast and had only printed a 3.3% increase. The headline CPI luckily was as in line with expectations and showed a 4.5% gain.
Other economic data released still disappointing though. Instead of showing a rise of 5.3%, the retail price index only reported a 5.2% gain. Meanwhile, the RICS house price balance, which measures the percentage of house surveyors who reported a rise in selling price, printed a 28% decrease, higher than the 20% decline initially expected.
The action continues today with the release of the claimant count change. The claimant count change will be released at 8:30 am GMT and is predicted to report that the number of people who claimed for unemployment benefits increased by 7,100 in June.
The country’s unemployment rate, which will be released at the same time, is also something to watch out for. The market expects that the unemployment rate remained steady at 7.7%.