Despite the release of good economic data, the pound took a beating in yesterday’s trading as risk aversion took over the markets. Lady cable dropped a whopping 119 pips to finish at 1.5501. What gives?
Even though the services PMI came in at its highest level in 5 months at 54.0, this wasn’t enough to boost sentiment in favour of the pound. Instead, everyone stayed focused on Italian bond auctions and rumors that major German bank may need help restructuring itself. This shifted the mood to risk aversion mode, causing higher yielding currencies like the pound to take a backseat to the dollar yesterday.
For today, we’ve got no hard hitting data coming out from the U.K., but make sure you keep an eye out for the NFP report coming out tonight. This will most likely spark some volatility in the markets, so be extra careful when it’s released during the New York session!
Pound bulls only watched in awe as the dollar owned the charts like the fourth of July in Friday’s trading. After consolidating for the most part of the day at 1.5500, GBP/USD plunged to a low of 1.5376 following the positive U.S. jobs data. The pair then closed 77 pips below its opening price at 1.5424.
The U.K. also released the Halifax HPI for December which showed that house prices declined by 0.9% during the month. Considering that we saw a bigger decline of 1.0% in November, I guess the report was relatively positive for the currency. However, the NFP report was much more anticipated and had been a bigger market-mover.
Of course, it also didn’t help that risk aversion still lingered in the markets no thanks to worse-than-expected data from the euro zone.
With our economic calendar blank for reports for the pound today, it might be a good idea to keep tabs on the data we have scheduled from the euro zone. Positive EZ figures will probably be bullish for GBP/USD too, so watch out!
The pound’s decline proved to be too overdone yesterday as it was able to retrace some of its losses. GBP/USD, which opened at 1.5413 yesterday, slowly climbed higher during the day to close the U.S. trading session with a respectable 46-pip gain.
It appears that the pound’s gains yesterday wasn’t the result of a change in sentiment, but rather traders simply taking profit on the pound’s decline. Be extremely careful when going long on the currency, as the move we’re currently seeing could simply be a “dead cat bounce.”
There were a couple of medium-tier news reports that were released. The BRC Retail Sales Monitor came out with a 2.2% gain, opposite the 1.6% decline seen the month before. The RICS House Price Balance report printed a 16% decline, a little bit better than the 18% decrease initially expected.
No major news report scheduled to be released on the economic calendar today from the U.S., so don’t expect a lot of volatility from the pound. This means that we could see the pound maintain its range and bounce of yesterday’s highs and lows. Keep a close eye on those major support and resistance levels folks!
Make that two wins in a row! The pound extended it’s gains against the dollar yesterday. GBP/USD traded higher from its opening price of 1.5459 and closed the day at at 1.5480 after getting rejected at the 1.5800 major psychological handle.
As it turned out, the pound got some lovin’ yesterday as investors somehow managed to set aside their worries about the euro zone and focused on positive data from the U.K.
The British Retail Sales Consortium (BRC) reported that consumer spending grew by 2.2% in December and erased the 1.6% decline that we saw in November. On top of that, RICS released its data on house prices for the same month which showed that there weren’t as many surveyors who reported a drop in house prices. Its report printed only -16% and was better than the expected -18%.
Given that, you should make sure you ain’t snoozin’ around when the U.K trade balance report is released later at 9:30 am GMT. A figure better than the expected 8.3 billion GBP deficit may give the pound its much-needed boost to trade above the 1.5800 handle, so watch out!
The pound took a major hit across the board yesterday due to rumors that the Bank of England might announce a fresh round of quantitative easing in its next meeting. GBP/USD, for instance, fell a whopping 156 pips during the day to end the U.S. trading session at a new 3-month low at 1.5324.
The only significant piece of data released yesterday from the U.K. was its trade balance. It printed an 8.6 billion GBP deficit, which was slightly higher than the projected amount. The worse-than-expected also added to the bearish sentiment towards the pound.
The U.K.’s forex calendar today presents two market moving events. The first one is the manufacturing production report at 9:30 pm GMT. The forecast is for a flat reading, which, if holds, will be a welcome improvement from the 0.7% decline seen the month before.
The second one is the much-awaited rate statement of the Bank of England’s Monetary Policy Committee that will be released at 12:00 pm GMT. Even though rumors that additional easing might be possible in the upcoming meeting came out yesterday, most market participants are still expecting no change in both the official bank rate and the quantitative easing program. It’ll take another month for the central bank’s QE program to end, so we probably won’t hear any new things until then.
While the other major currencies were bouncing up and down the charts, the pound was chillin’ like ice cream fillin’ against its counterparts yesterday. Guppy capped the day with a nice doji at 117.82, while GBP/USD only rose by 19 pips to 1.5343.
Does this mean that the pound traders can take an early weekend? Heck no! The Bank of England might have kept its interest rates intact at 0.50% and its asset purchases at 275 billion GBP, but it doesn’t mean that the central bank is without its concerns!
Of course, we might have to wait for the BOE minutes to see what the central bankers think about the economy. In the meantime, we can focus on other economic reports released from the U.K. I’m warning you though, it doesn’t look too awesome.
The day started off with manufacturing production printing a 0.2% decline in November, a bit worse than the 0.0% growth that analysts were expecting. Then, the industrial production numbers released a couple of hours later showed another 0.6% decrease in November after already falling by 0.1% in October.
If you think those are bad news, then you better brace yourself for this one! After the BOE rate decision was released, the National Institute of Economic Research (NIESR) published its GDP forecast for the last quarter of the year. According to the report, the U.K. only grew by 0.1% in the last three months, which is a disappointment from its previous 0.3% estimate.
Will bearish news continue to rain in the U.K. today? Only the input and output producer price index reports at 9:30 am GMT is scheduled for release today, and analysts expect the reports to clock in 0.1% lower than their November readings. Still, keep your eyes peeled in case there are any surprises!
Negative developments from Europe and other parts of the globe tempered risk taking again last Friday. Apparently, the Italian bond auction had weak demand and JP Morgan, a huge financial company, reported weaker-than-expected earnings. Cable, as a result, closed the day at 1.5323, 20 pips lower fromm its opening price that day.
The PPI for Input report also shared the same disappointing tone of the market. It came out with a 0.6% decline, much worse than the flat reading initially expected and the previous month’s 0.3% increase.
This week, we’ve got a couple of red flags on the U.K’s economic calendar.
First is the consumer price index. It will come out tomorrow, at 9:30 am GMT, and is expected to print a 4.2% inflation rate.
On Wednesday, the country’s labor data will be published. The Claimant Count Change that measures the change in the number of unemployed people is predicted to have risen by 8,200. Meanwhile, joblessness is forecasted to have remained at 8.3%.
The most important report to watch out for is the U.K.'s retail sales report. It is slated to published a 0.6% gain, opposite the 0.4% fall seen the month before.
“[I]Roses are red, violets are blue. There were no reports from the U.K., so I don’t have a clue.[/I]” With the U.K. not releasing any economic reports yesterday, traders might have stayed on the sidelines and waited for the big reports scheduled for release today. Cable might have risen by 41 pips to 1.5323, but GBP/JPY barely moved from its open price, which is what happened to most of the pound pairs.
Let’s see if the reports scheduled for release today can wake up the pound bulls and bears.
The fireworks will start at 9:30 am GMT when the CPI report is due, followed by a speech by BOE Governor Mervyn King at 9:45 am GMT. Remember, the government expects the CPI to ease this year, so a number higher than the previous 4.8% growth might be bearish for the pound.
At 10:00 am GMT the CB leading index will be released. A figure higher than the 0.4% decline we saw last month could probably give the pound some support. Last to hit the spotlight today is MPC member Adam Posen with his speech at 6:30 pm GMT. He’s a known advocate for more QE, so it’s interesting to see how he will react to the latest CPI numbers.
Good luck in your trades today, kids!
The pound ended the day slightly higher than both the Greenback and the yen, as GBP/USD closed 9 pips up from its 1.5323 open price while GBP/JPY landed 13 pips up from its 117.66 open. Let’s take a look at the factors that boosted these pairs yesterday.
Inflation data in the U.K. came in line with expectations as their annual CPI fell from 4.8% to 4.2% in December. The core version of the report showed a drop from 3.2% to 3.0% while the retail price index dropped from 5.2% to 4.8%, signaling that inflationary pressures are weakening in the country. This means that that the BOE would have more room to implement further asset purchases if necessary, and they will most likely do so in their next monetary policy meeting.
Up ahead, the U.K. is set to release its jobs data at 9:30 am GMT today. The claimant count change report could come in at 9.1K for December, thrice as much as November’s 3.0K figure, which would reflect a huge increase in joblessness. Their unemployment rate is expected to hold steady at 8.3% but weaker than expected jobs figures could push this higher and consequently drive the pound lower. Be careful when trading the news!
What bad data?! The pound continued to climb against its counterparts yesterday despite the release of disappointing economic reports from the U.K. GBP/USD closed 110 pips above its open price, while GBP/JPY also shot up by 79 pips to 118.58.
If you’re looking at the U.K.’s economic data released yesterday for explanation for the pound’s strength, then don’t bother. The claimant count report we saw yesterday only showed an additional 1,200 jobs in December, which is a bit less than the 9,100 change that market geeks were expecting.
The unemployment rate report also added more disappointment yesterday as it prints an 8.4% unemployment rate for the month of November. The data is not only weaker than October’s 8.3% reading, but also marks the report’s 16-year low. Uh-oh.
A couple of hours ago we also saw the Nationwide consumer confidence report register at a 38 index reading, which is weaker than the 40 index number we saw for the month of November.
No other reports are scheduled to come out from the U.K. today, so you might want to pay attention to the euro zone and the U.S. for any major report. Who knows, maybe it will be a game-changer in risk sentiment!
Good luck trading today, kids!
With risk appetite still on a roll, the pound hammered away against the dollar and yen yesterday. GBP/USD rose another 52 pips to close at 1.5493, while GBP/JPY finished at 119.51, up 93 pips from its opening price. Boo yeah!
So what caused the pound’s good fortune yesterday?
Apparently, people still believe in good ol’ France, as the French bond auctions were largely successful. In addition, the Spanish bond auctions also generated positive interests, as yields on 10-year Spanish bonds went for 5.403%, way down from the 6.975% we saw two months ago.
This helped alleviate some tensions in the market, allowing high yielding currencies like the pound to gain some ground.
For today, we could be in for some wild moves, as monthly retail sales figures are due at 9:30 am GMT. Word through the forex grapevine is that the holiday season did some good for retailers, as sales are projected to have increased by 0.6%. If the figure comes in even higher than that, we might see GBP/USD bust right through the 1.5500 handle!
The pound was too fly in Friday’s trading to be depressed by concerns about the euro zone. GBP/USD extended its upward rally, ending the week at 1.5568, 75 pips above its opening price for Friday.
So what kept the pound afloat? Well, I have a feeling that it might have been the retail sales report we saw from the U.K. According to National Statistics, consumer spending picked up in December and rose by 0.6%, erasing the 0.5% decline we saw for November. However, looking deeper in the report I found out that retailers had to make crazy price cuts just to get customers shopping which means that the uptick may only be temporary. Then again, the figure was what analysts had expected, so I guess it was good enough for traders.
Our forex calendar is blank for reports from the U.K. today but keep tabs on market sentiment, ayt? Remember that the currency usually rallies when risk appetite is up. Good luck!
And the pips just keep comin’ for the pound! Even though BOE member Adam Posen had a few dovish things to say about the economy, the pound was able to extend its rally for another day. GBP/USD climbed another 42 pips on the day, recording its 6th straight day of gains.
The only news to come out of the U.K. was from Adam Posen’s lips. According to the policymaker, even though the outlook for the economy has improved, the U.K. might still need a boost in the form of more quantitative easing. But no one was really surprised to hear that from Posen. After all, he did vote for more QE all throughout 2011!
Up ahead, we have public sector net borrowing data on tap at 9:30 am GMT. Survey says that we’ll probably see net borrowing slide from 15.2 to 12.4 billion GBP. Look for the pound to strengthen in the event net borrowing comes in lower than expected because it would imply that the U.K.'s austerity measures have been effective in slashing government borrowing!
The pound chalked up another day in gains against the Greenback as GBP/USD breached the 1.5600 handle and closed at 1.5619. GBP/JPY also had its share of wins as it successfully cleared the 121.00 hurdle and landed at 121.40.
U.K.'s public sector net borrowing report came in better than expected as it printed a 10.8 billion GBP figure instead of the projected 12.4 billion GBP deficit. The smaller deficit for December indicates that the government needed to borrow less money for the month, reflecting that the austerity measures are doing their trick.
However, towards the end of the London session, BOE Governor King gave a speech which hinted at the prospect of further QE from the central bank. Apparently, their head honcho is still gravely concerned about the ongoing euro zone debt problems and its potential impact on the British economy. With that, he pointed out that the BOE is ready to provide extra liquidity should their banks need it.
For today, the BOE is set to release the minutes of its latest monetary policy meeting. Recall that the central bank decided to make no changes to its monetary policy during their latest decision, but the minutes could reveal how many members actually wanted to see further easing. Sit tight during the release at 9:30 am GMT because it could usher in extra volatility for the pound pairs!
Also due then is the preliminary GDP figure for the U.K. After expanding by 0.6% in the third quarter of 2011, the British economy is expected to contract by 0.1% during the last quarter of the year. An even larger than expected contraction could be very negative for the pound so make sure you stay tuned for the actual release at 9:30 am GMT.
The CBI industrial orders expectations, index of services, and BBA mortgage approvals report are also due at that time but these data could take a backseat to the MPC meeting minutes and U.K. GDP. Nevertheless, it’d help to keep an eye out for these figures if you’re trading any of the pound pairs!
Mixed trading for the pound yesterday, as it succumbed to the euro but managed to edge higher versus the dollar. EUR/GBP crawled back up to .8369, up 28 from its opening price, while GBP/USD finished at 1.5669, marking a 40-pip victory on the day.
The reason why the pound dropped against the euro was thanks to BOE meeting minutes, which revealed that King and the rest of his monetary policy gang believe that the expansion of the bank’s asset purchase program (a.k.a quantitative easing) is very likely. Given that the U.K. economy shrank more-than-expected by posting a 0.2% decline and could very well re-enter another recession next quarter, it’s not surprisingly at all that the BOE may want to give the markets a fresh shot of liquidity.
For now, the central bank will wait for current measures to finish before implementing another round of asset purchasing. I’d also keep an eye out on inflation, as lower-than-expected inflationary pressures would certainly be welcome, as it would give the BOE more room to dump fast cash into the economy.
Later today at 11:00 am GMT, CBI realized sales figures will be available. The index is expected to print at -2, indicating a drop in sales over the past month. If the report comes in better-than-expected, it could give the pound the boost it needs to extend its gains versus the dollar and reverse its losses against the euro.
Is the pound’s rally finally about to come to an end? It posted its 9th straight victory against the dollar yesterday, but it didn’t really do it convincingly. GBP/USD rallied to a high 1.5735, but it couldn’t keep its head above the 1.5700 handle. It eventually ended the day at 1.5687, up only 18 pips on the day.
Sadly, the only bit of information to come out of the U.K. came in the form of a worse-than-expected CBI realized sales report. According to the latest stats, spending took a big dip this month, forcing the index to fall from its reading of 9 to -22 (versus forecasts which called for a reading of -2).
To put things into perspective, this is the BIGGEST drop U.K. retail sales has experienced in three years! Spending stalled in January as compared to December, when many took advantage of holiday discounts.
Our economic calendar will be blank for the U.K. today, but do set your eyes across the Atlantic Ocean if you plan on trading GBP/USD. The U.S. is slated to publish its quarterly GDP report in the New York session, and that could serve as a catalyst for big moves on GBP/USD. Good luck, folks!
Clean sweep baby! For the second straight week, cable shut out the dollar, posting another 44 pip victory on Friday to finish at 1.5731. For those of you who can’t do simple math, that’s TEN straight days that GBP/USD has closed higher! Boomshakalaka!
The big question is, will cable be able to extend its winning ways? Or will it finally give in to some short-term profit-taking midway through this week?
No data coming out from the U.K. today, but make sure you keep our awesome economic calendar bookmarked, as we’ve got the construction and services PMIs coming out later this week. I’ll be sure to keep y’all posted!
Just like Rafael Nadal who lost the Australian Open to my homeboy Novak Djokovic, the pound also failed to snatch a win against the dollar. GBP/USD traded lower yesterday and ended the day 34 pips below its opening price at 1.5702.
With our forex calendar blank for reports from the U.K. yesterday, it seems like the pound fell victim to market sentiment which was heavily influenced by the disappointing EU Summit. Boo!
Now, if you’re looking to play the pound today, be sure to keep in mind these reports that we have on tap:
Earlier we saw the GfK Consumer Confidence index for January come in better than expected at -29. The report should be positive for the currency as analysts were bracing to see that pessimism was more intense with the forecast down at -31.
Later at 9:30 am GMT, we’ll have the BOE’s data on net lending for December. The report is expected to show that 1.2 billion GBP worth of credit was issued during the month. A figure higher than the consensus will probably be bullish for the pound as lending is seen as positively correlated to consumer confidence and spending. So watch out!
It looks like the cable bulls just needed a one day break before it could resume its crazy run! Once again, the bulls came out on top, as GBP/USD posted an impressive 55-pip win to finish at 1.5757. Could this be the start of another winning streak?
Net lending figures came in lower-than-expected, as just 400 million GBP was lent out last month. Expectations were that 1.2 billion GBP would be given out in loans in order to help boost consumer spending. Nevertheless, this didn’t have a negative impact on the pound, as it continued to strut up the charts with some swagga as risk appetite got a nice boost during yesterday’s London session.
For today, we’ve got the nationwide HPI and manufacturing PMI reports coming in at 7:00 am GMT and 9:00 am GMT respectively. My sources tell me that home prices dropped by just 0.1% last month, while the manufacturing PMI is expected to finally print at 50.1. A positive increase in home prices and a better-than-expected PMI score would both help the pound’s cause and could help GBP/USD break through the 1.5800 barrier.
Whoa! Pound bulls partied like it’s the end of the world on the charts yesterday. Thanks to positive data and risk appetite, GBP/USD was able to end the day 71 pips above its opening price at 1.5828. Boo yeah!
It looks like overall market sentiment was boosted by optimism Greece will soon come into terms with its creditors and positive Chinese data. Of course, it also helped the pound that the U.K.’s manufacturing PMI came in higher than expected. It was reported that manufacturing activity jumped to an eight-month high, printing at 52.1 in January. The figure topped expectations which were for a more modest increase to 50.1 following December’s 49.7 reading. Yahoo!
Whether the growth in manufacturing is only seasonal or if it’s going to be a trend, we will have to wait a few more months to find out. Until then, let us keep tabs on the construction PMI report for January (due to be released later at 9:30 am GMT) to help us gauge which direction the pound will head on the charts. The forecast is for construction activity to have pulled back a little bit during the month to 52.8 following the 53.2 reading we saw for December.
A positive report will probably score the pound another win against the dollar, so watch out!