As the spotlight remained on Ireland and its debt problems, a dark shadow was cast over “riskier” currencies such as the pound. Risk aversion brought Cable down from its opening price of 1.6004 to close about 40 pips below the 1.6000 handle. On the other hand, GBP/JPY finished 60 pips lower for the day at 132.92.
It was quite unfortunate for pounds bulls that the U.K. did not release any reports to counter the negative sentiment brought about by Ireland’s woes. The pound, in particular, was heavily affected by developments in Ireland because the U.K. offered to loan Ireland 7 billion GBP. This, of course, would require the conversion of 7 billion GBP into euros, a huge pound selloff.
Now why in the world would the U.K., which is dealing with its own austerity plans, stick its neck out for Ireland in the first place? Apparently, U.K. banks have large holdings and are heavily invested in Irish banks. That said, its own banking sector could be dealt a heavy blow if Irish banks were to collapse.
The rest of the day may remain light and will probably still focus on developments in Ireland. But there is a small chance for a bit of action if the BBA mortgage approvals data prints a big surprise. The report is due at 9:30 am GMT and is anticipated to print a softer figure of 31,000 for the month of October, down from 31,100 in the previous month.
At 2:30 pm GMT, MPC member Posen is scheduled to speak. You may want to take note of what this dove has to say because his comments have moved the pound in the past.
Currency bears attaaack! The pound continued to feel the weight of riskaversion yesterday when it dropped heavily against the yen and the greenback. Only the mortgage approvals report was released yesterday, but GBP/USD plunged to an intraday low of 1.5759 before it ended the day at 172 pips lower at 1.5782. Meanwhile, GBP/JPY gave up 167 pips at 131.25 after peaking at an intraday high of 133.40.
Yesterday’s housing data revealed a drop in the number of mortgages in the U.K. from 31,100 in September to only 30,800 in October. This got the fusspots thinkin’ that the already weak data will be in an even tighter spot when the government’s budget cuts and tax increases start kicking in.
Today will be another good day for day traders as a string of economic data is scheduled in the U.K. The party will start at 9:30 am GMT when the revised quarterly GDP is released. Analysts aren’t expecting a movement from its preliminary reading of 0.8%, but don’t let any surprises catch you!
At 9:30 am GMT we’ll also see the preliminary business investment figures for the third quarter. A smaller uptick of 0.6% is expected after capital investments rose by 0.7% in the second quarter.
Then at 12:20 pm GMT we’ll hear from Monetary Policy Committee member Andrew Sentance as he gives a speech at the Agency Event in Belfast. Tune in for any hints on the Bank of England’s next actions!
Have sellers finally decided they’ve shed enough pounds? With no revision being made for the second estimate of U.K.’s GDP, Cable ended the day practically unchanged as well at 1.5776.
The National Statistics office decided that they got it right the first time when they estimated a 0.8% quarter-on-quarter growth for Q3. But even though GDP remained unrevised, a closer look at its underlying components reveals all is not well.
It’s no mystery that domestic demand has been down lately. Recently, we saw a downward revision in consumer spending. And just yesterday, the U.K. was slapped in the face with a 0.2% downtick in business investment in Q3. According to the preliminary business investment report released yesterday, capital investments declined sharply, falling below expectations of a 0.6% increase following the 0.7% rise in the previous quarter.
As you know, the U.K. faces further belt-tightening with its austerity measures. Could this mean the worst is yet to come?
Another noteworthy event yesterday was BOE MPC member Sentance’s speech. He remained hawkish with his words, expressing concern over the inflation outlook for his country. He said that if the central bank continues to hold back from raising interest rates, it faces a greater risk of having to raise rates at a worse time in the future.
Phew! What a time for him to speak up! At 10:00 am GMT today, BOE Governor Mervyn King and a few MPC members will be holding the inflation report hearings. Let’s see what the other members have to say about the inflation situation.
An hour after that, we take a look at the CBI distributive trades data. The report, which surveys retailers and wholesalers on their sales, is set to print a reading of 33, down from 36. Since this is the market’s first look into consumer spending for the month of October, a figure lower than what’s expected may cause a fresh pound selloff.
Just as it was for the other major currencies, action for the pound was about as boring as it gets. With the U.S. players out on holiday, Cable traded within a 50-pip range, closing just 15 pips from its opening price at 1.5760.
At the inflation report hearings and in his speech, BOE Governor Mervyn King, like a parrot, reiterated the central bank’s belief that risks to inflation are “broadly balanced” at the moment. As you know, inflation has been stubbornly high in the U.K. Prices rose 3.2% in October, still waaay above the central bank’s target of 2.0%.
King basically said that the BOE is on standby mode when he expressed that it is ready to act if needed. But whether we’ll see a tighter policy or a looser policy is yet to be determined. If you recall the last time the MPC met, members were split as to whether they should pursue further quantitative easing or not. For now, it looks like they’re maintaining their wait-and-see approach.
As for economic data, yesterday’s CBI distributive trades data came in much better than expected. The report printing a reading of 43, surpassing forecasts for a 33 and previous month’s reading of 36. Though markets didn’t react much to the news, this should help dispel some concerns over the U.K.’s weak domestic demand.
No reports from the U.K. today. However, be prepared for breakout plays as U.S. traders come back from vacation! Who knows, market reaction to yesterday’s events may just be delayed! Good luck out there!
After the Ireland debacle, you’d expect debt issues to take a short break. But that’s just wishful thinking. Last Friday, Cable had another major decline when “new” debt troubles from euro zone popped up and triggered another round of risk aversion. From its Asian session opening price of 1.5760, GBP/USD fell more than 150 pips to close the U.S. trading session at 1.5592.
The “new” debt troubles I am talking about is the news that European Central Bank officials are pressuring Portugal to accept a bailout package similar to that of Ireland. So far, the rumors remain unconfirmed, but they were enough to trigger risk aversion. Talk about adding insult to injury!
For today, we’ve got the net lending to individuals report at 9:30 am GMT. The consensus is a value of 800 million GBP for October, which is double the value seen in September. Increasing lending is usually interpreted as positive for Cable, as it means that banks are becoming more and more confident in the financial standing of their clients.
There’s also the Gfk consumer confidence survey. Scheduled to come out at 12:01 am GMT later, it is predicted to show a reading of -20 for November. A reading below 0 means that businesses are pessimistic about the current and future situation.
If that’s not enough for ya’ll news traders, don’t worry… There are a lot more data in store for the rest of the week!
On Wednesday, expect to see the Nationwide house price index and the manufacturing PMI. The Nationwide HPI is slated to to show a decline of 0.4% while the manufacturing PMI is predicted to print a reading of 54.9. And finally, on Friday, the services PMI will be released. For this survey, a 53.2 figure has been predicted, which is the same as the figure we saw the previous month. If the actual figures come in higher than forecast, then we could see Cable retrace some of its losses.
What’s new with the pound? Nothing new as it seems, as the bears did what they had been doing for the past couple days again yesterday… Sell the pound like there’s no tomorrow! GBP/USD, after retracing some of its losses to touch an intraday of high of 1.5649, was quickly brought back down by the bears to eventually close the U.S. trading session at 1.5573.
Apparently, risk aversion stemming from euro zone debt concerns is still too fresh on the minds of traders to make them care about anything else!
Heck, even positive results on U.K. data was unable to provide pound bulls with enough juice to keep GBP/USD above the 1.5600 handle…
The report, which was initially slated to show a 800 million GBP figure, printed a 1.3 billion GBP figure instead, hinting that consumers became more comfortable in taking out debt for the month of October.
U.K.'s data cupboard has nothing to offer us today, so look for news from other major economies to see where GBP/USD is headed.
Pay special attention to the Chicago PMI and CB Consumer confidence survey from the U.S., as they will determine whether risk aversion will be the driving force of price action today again or not!
It wasn’t the best way to end November, but the pound had no choice but to crumble to risk aversion and bad economic data. It racked up its eighth straight loss as GBP/USD [U][/U]finished the day at 1.5555 after opening at 1.5574. Against the yen, it performed even worse as GBP/JPY locked in a 100-pip slide and closed at 130.19 at the end of the day.
Confidence in the U.K. was down in November according to the GfK consumer confidence report published yesterday. Consumers have become even more pessimistic, as the report gave a reading of -21, down from -19 the previous month. Could the country’s stubbornly high inflation be behind the drop in confidence?
Good news for those of you looking to trade the news… There’s no shortage of reports today!
At 7:00 am GMT, the U.K. will roll out its Nationwide house prices report. A 0.5% decline is expected to follow October’s 0.7% decrease.
On the other hand, the Halifax house price index is expected to show a modest 0.3% uptick following the previous month’s 1.8% rise. Catch it at 8:00 am GMT.
We also have the manufacturing PMI on tap today at 9:30 am GMT. Analysts say the index will probably print a drop from 54.9 to 54.7 in November.
Phew! Now, you know the drill! Be on the lookout for better-than-expected figures that may cause the pound to rally!
But just in case you’re not into numbers, you may want to check out what MPC members Tucker and Dale have to say. The two are scheduled to speak up later today and could give clues as to what the BOE may do in the future.
Ah, there’s nothing like the perfect combo of positive economic reports and risk appetite to get the pound cruisin’ up the charts. At the end of yesterday’s trading, GBP/USD was 64 pips higher at 1.5619 while GBP/JPY was up 128 pips at 131.47. Sweetness!
Good vibes coming from better-than-expected data from China and Europe spilled all over the markets, encouraging traders to go for higher-yielding currencies such as the pound.
It also helped that Nationwide’s house price index, which printed a 0.3% decline in November, wasn’t as bad as what the market was bracing for. Analysts were a tad more pessimistic with their -0.5% forecast.
Making the pound even more appealing was the Manufacturing PMI for November that pointed to increasing manufacturing activity in the U.K. with the index higher at 58.0 than an expected 54.7 reading.
With that said, you may want to keep tabs on the reports we have on tap for the pound today as they could help the currency stack up its gains! Of course, be sure to get a feel of the market’s mood before you enter any trade.
We’ll get more dibs on how the British housing market is doing if Halifax issues its own HPI later at 8:00 am GMT. According to our economic calendar, it will release the report anytime between today and Saturday. So be on your toes and note that the consensus is for a 0.3% increase in November!
Then at 9:30 am GMT, the Construction PMI for November will be announced and economic gurus are eyeing CIPS’s report to come in at 51.3.
If you’re looking to buy the pound, keep your fingers crossed for the figures to print higher than expected! May the pips be with y’all!
Among the majors, the pound was the only one that lost against the Greenback in yesterday’s trading. Boo! GBP/USD tumbled from a high of 1.5668 all the way down to 1.5512. Risk appetite then boosted the pair a bit to close at 1.5599, but it wasn’t enough to end the day with a win for the pound.
What made its loss even more frustrating was that the Construction PMI for November came in better than expected at 51.8 versus the 51.3 consensus.
Profit-taking might have taken place ahead of ECB President Trichet’s speech and caused the currency to slip. Unfortunately, there just wasn’t enough pound lovin’ to go around when market sentiment shifted from risk aversion to risk appetite.
But don’t fret! Today’s another day on the charts and the pound may just be able to advance against the dollar if the November Services PMI, due at 9:28 am GMT, posts a figure better than the predicted 53.2 reading.
You may also be able to reel in some pips when Halifax releases its HPI today at 8:00 am. Note that the consensus is for a 0.3% increase in November.
Be extra careful with your trades today. Remember that it’s NFP Friday and we may be in for a wild ride!
Because of dollar weakness, even the pound was welcomed into the winners club! GBP/USD posted an awesome 173-pip climb last Friday, riding bad U.S. data all the way to the top!
Even though the U.K. printed a weaker-than-expected services PMI for the month of November, the pound still managed to rally against its American counterpart. The index eased from 53.2 to 53.0 last month, and though this means the sector still experienced growth, its pace of growth is still sluggish and below average.
Analysts attribute part of the weakness to rising input costs, which have forced some employers to cut back on employment. Once again, we see the harmful effects of strong inflation!
You can count on the U.K. to deliver hard-hitting economic data this week!
Sometime tomorrow, it is scheduled to publish the Halifax HPI, which is forecasted to print a 0.3% uptick in November following the 1.8% increase in house prices October.
Also due tomorrow is the manufacturing production data for October. An increase of 0.4% is expected, four times that of the previous month. Catch it at 9:30 am GMT!
But no doubt, the highlight of this week will be the MPC’s interest rate statement on Thursday at 12:00 pm GMT. For the past few months, the official bank rate has been pegged at 0.50% and no changes have been made to the 200 billion GBP asset purchase facility.
Even though most expect the central bank’s monetary policies to stay the same (again!), there is still a chance we’ll see some changes. After all, the BOE is divided now more than ever, so a surprise announcement may be in store for us!
The pound’s scorecard in yesterday’s trading was as mixed as the reviews for the season finale of The Walking Dead. It was able to bag 24 pips from the euro with EUR/GBP settled at .8466, but it gave up 48 pips to the dollar as GBP/USD ended the day at 1.5722. Drats!
One reason why the pound lost to its safe haven counterpart was because the British Chamber of Commerce revised its 2011 GDP forecast for the U.K. from 2.2% to 1.9%. Ouch!
But despite the downgrade, market whiz kids think that investors still favor the pound over the euro. They cite that the slide in EUR/GBP was because of the better-then-expected reports we saw from the U.K. last week.
With that said, you should be on your toes for the lineup of economic reports we have for today and see if the figures will give traders more reason to root for the pound.
The day didn’t start off well with the BRC Retail Sales Monitor for November printing a measly 0.7% uptick, which is 0.1% lower than its reading for October. But we still have data on manufacturing and industrial production for October later at 9:30 am GMT. If the reports come in higher than their consensus forecast of 0.3%, the pound may just be able to kick the dollar’s hiney on the charts.
Then at 3:00 pm the NIESR GDP estimate for the third quarter will be on tap. An upward revision from October’s 0.5% reading will probably have a bullish effect on the currency so watch out for that too!
With positive data as its Piptorade, there was no stopping the pound from knocking pips out of its counterparts. Boom, boom, ka-pow! GBP/USD closed the day 48 pips higher at 1.5770 while EUR/GBP was down 51 pips at .8417.
The October manufacturing production report came in at 0.6% and beat market expectations which was for 0.3% uptick. Making it even better was that it printed the strongest pace of growth in seven months! Boo yeah!
On the other hand, the industrial production data for the same month was unable to impress the market. But some economic gurus think that it’s still all good in the hood! They cite the volatility in mining, quarrying, and utility activity as the probable reason behind the 0.2% decline that the report posted which disappointed the projected 0.3% increase.
So given that the pound’s recent strength on the charts has been fueled by positive economic reports, it may be wise for you to be on your toes for the Halifax HPI. Our economic calendar indicates that it is scheduled to be released either today or tomorrow at 8:00 am GMT. A figure higher than the expected 0.3% uptick will probably be bullish for the pound as this would be indicative of a healthy housing industry.
Earlier today we got dibs on retail prices with the BRC Shop Price Index showing a measly 2.0% increase in November which was lower than its 2.2% reading in October. But I would worry more about market sentiment than the third-tier report weighing down the pound if I were you.
The pound staked its claim as the heavyweight (Get it? Weight… Pound… Okay, nevermind…) champion in the forex arena yesterday. The pound survived a knockdown from the dollar before banking on some economic data to push 40 pips higher and finish at 1.5807. Ha! Pound bulls didn’t even need to drink their own urine (seriously Marquez?) to do this!
Apparently, the best performance enhancer for the pound was the CBI index. The index printed a reading of -3, which was much better than the anticipated score of -12, and a nice improvement from the previous month’s printing of -15. This indicates that the decline in orders is slowing down, and we may just see them pickup in the coming months.
Looking ahead, it looks like our economic calendar will be jam-packed today!
First, the Halifax report will finally be released at 8:00 am GMT. Housing prices are expected to have risen slightly in the past month, up 0.3% from October.
Later on, at 9:30 am GMT, the trade balance report is scheduled for release. The is projected to have shrunk from 8.23 billion GBP to 8.1 billion GBP. This would reflect an improvement in trade, quite possibly to the recent slide of the pound. Remember, when a currency is weak, it makes exports of the domestic country more attractive, as it makes their goods effectively cheaper than that of competing nations.
Lastly, for today’s main event, we’ve got the BOE interest rate decision. It’ll be interesting to see what central bankers think of the economy. Seeing as how the U.K has been posting some relatively good data recently, it could give central bankers less reason to add more stimulus to the economy. In any case, watch out for this event, as it could hit the markets with a haymaker that nobody sees coming!
Yesterday, the pound took a hit in the gut and was pressured lower as Fitch, a credit rating agency, slashed Ireland’s sovereign credit rating by three levels to BBB+ from A+. Fitch’s action gave Mr. Risk Aversion a reason pop its head back into the markets, which led to a pound sell-off.
Disappointing results on U.K.’s economic data also gave traders more reason to exchange their pounds for “safer” currencies like the dollar and the yen.
For one, the Halifax house price index reported a 0.1% decline instead of the 0.3% increase consensus. Then, U.K’s trade balance for the month of October showed that there was a 8.5 billion GBP deficit, significantly higher than the 8.1 billion GBP deficit initially expected.
The BOE’s interest rate decision was a non-event, as the bank, as expected, kept rates unchanged at 0.50%. The BOE refrained from expanding its 200 billion GBP asset purchase facility (that’s just another fancy word for quantitative easing).
U.K.’s economic calendar today won’t be as “fun-filled” as only the significant report due is the country’s producer price index for output. Scheduled to come out at 9:30 am GMT, the PPI Input is expected to show a climb of 0.7% in prices for November, a third of what we saw the month before.
I don’t suspect the PPI Input to have a lot of impact on price action, but still do keep an eye out on how the pound reacts after the release! If the actual results beat expectations, then we could see the pound regain some of its losses from yesterday.
Despite lower-than-expected economic data, the pound was still able to post gains against its major counterparts. At the end of Friday’s trading, GBP/USD was up 46 pips at 1.5811, while EUR/GBP was down 34 pips at .8366. And no, its wins didn’t have anything to do with Prince William and Kate Middleton’s engagement photos.
Although output prices for November didn’t get traders going gaga at first glance with the headline figure coming in as expected at 0.3% and the core reading falling short of expectations by 0.1% at 0.2%, the annual numbers might have been enough to get bulls giddy. Compared to a year before, the headline figure for output prices is up 3.9%.
A few of my buds are saying that the report is one more proof that inflation in the British economy isn’t just a momentary fling which is what the BOE has been insisting for quite a while now.
But let’s not jump into conclusions until we see the November CPI report tomorrow at 9:30 am GMT, and the input prices report for the same month due later at 9:30 am GMT. Note that analysts are expecting the reports to come in at 0.2% and 0.5%, respectively.
If you’re planning to bet your pips on the pound you may want to keep your fingers crossed for higher-than-expected figures to offset the negative vibes that might have come the Rightmove house price index for December.
Earlier today we saw that asking price of homes continued to decline by printing at -3.0%, following November’s -3.2% reading.
Oh well, you can’t have everything, bro! The pound was able to dodge a few meaner bullets from the markets yesterday when a wave of risk appetite dampened the effects of the U.K.’s economic data. Though Sterling was able to post gains against the Greenback, it also slipped by 37 pips against the yen and 79 pips against the euro.
The U.K’s producer input prices only grew by 0.9% in November, which was slower than October’s 2.2% but a bit faster than the expected 0.7% rise. Apparently, the rise in raw material costs was caused by price increases of oil, energy, and imported goods.
Speaking of rising prices, the U.K.’s CPI figure for November will take center stage today at 9:30 am GMT. Analysts peg the figure at 3.1%, which is still higher than the Bank of England’s 3.0% target. This might prompt the BOE to write another letter to the Chancellor for the tenth consecutive month, and leave the traders wondering how the BOE will respond to the dilemma of rising prices and falling demand.
Be careful in your trades today, buds!
“[I]O na na, what’s my name?[/I]” The pound danced to my gal Rihanna’s tune as traders ditched then forgot all about the Sterling on disappointing economic figures in the U.K. GBP/USD plunged by 76 pips against the Greenback, and ended the day with a 17-pip loss against the yen.
The CPI numbers released yesterday revealed that consumer prices rose by 0.4% in November, which unexpectedly pushed the annualized rate to 3.3%, a 6-month high. Sharp increases in clothing and food prices are to blame, with food costs jumping by 1.6% last month. Meanwhile, core prices remained at 2.7%.
The stubborn inflation figures highlighted the Bank of England’s dilemma between high consumer prices and expected low demand brought on by austerity measures scheduled next year. Will it provide stimulus, or tighten up its monetary policy? Many analysts are betting that the BOE will play a waiting game until next year.
Today we have the jobless claims report on tap at 9:30 am GMT. Unemployment claimants dropped by 3,700 in October, but more decreases in November could provide the pound a lift in the charts.
The average earnings index will also be released at 9:30 am GMT, while the CBI survey on retailers and wholesalers is scheduled to pop up at 11:00 am GMT. Market junkies are pegging the index number at 38, but a higher figure might signal optimism in the U.K.’s consumer spending.
Don’t let me catch you snoozin’ on these reports!
WTFs and OMGs resounded in the markets yesterday, not because of news that Ryan Reynolds and Scarlett Johansson are both single again. Rather, it was because of the pound’s slide against the dollar from its opening price of 1.5783 all the way down to 1.5545!
Economic gurus point to the mixed labor figures we saw yesterday for the pound’s 238-pip loss. It was reported that the unemployment rate for October tapped is 3-month high at 7.9%, and disappointed the 7.7% forecast.
Another reason for the market’s tantrum could’ve been the claimant count report which showed that the number of people claiming for unemployment benefits only fell by 1,200 when it was predicted to have declined by 3,000 in November.
These figures might have offset the positive vibes that came with the average earnings report for October that beat the market’s target by 0.1%, printing a 2.2% uptick.
I bet we’ll be hearing more WTFs and OMGs in today’s trading with the highly-anticipated retail sales report on tap.
At 9:30 am GMT, analysts are expecting to see consumer spending to have maintained its pace of growth in November with a 0.3% forecast for December.
A few of my buds are saying that there’s a good chance that we could be in for a pleasant surprise given that the CBI distributive trades report for December rose to an 8-year high at 56.0. Considered as a separate measure of consumer spending, the report came in yesterday better than the expected the 38.0 figure.
The BOE will also report on its inflation attitudes survey. Keep an ear out for hawkish remarks as these may help the pound pare some of its losses the Greenback!
Finally! The pound got its act together yesterday after taking a pounding against its major counterparts early in the week. GBP/USD jumped by 89 pips to 1.5634, while EUR/GBP plunged by 64 pips to 0.8468. Meanwhile, GBP/JPY rose to an intraday high of 131.65 before closing at 131.36.
It seemed that the pound bulls got a kick from the U.K.’s retail sales report that showed a 0.3% rise in November. Upward revisions in October’s numbers also pushed the annualized figure to a growth of 1.1%, which suggested that consumer demand is holding up well as the U.K. economy slowly chugs towards recovery.
Speaking of sales, the consumer inflation expectations report also clocked in an increase in November, printing a 3.9% growth against October’s 3.4% figure. This highlighted the Bank of England’s dilemma between rising prices and relatively low consumer demand.
Only the Nationwide consumer confidence report is the big hitter from the U.K. today, but keep close tabs on any report that might change risk sentiment! The index figure is expected to drop to 45 from October’s 52, but don’t let any surprises catch ya!
Ka-blam! The pound was hit by a double combo of gloomy economic reports last Friday, which caused the pound bears to launch an early end-of-year party. GBP/USD took a 116-pip hit at 1.5519, while GBP/JPY plunged by 120 pips at 131.16. Meanwhile, EUR/GBP reached an intraday high of .8553 before ending the week at .8496.
Last Friday’s Nationwide confidence report showed that consumers weren’t feeling too giddy about the economy in November, especially whenhigher taxes and steep budget cuts are in store for them next year. The data clocked in at 45, way below last October’s index figure of 52.
The lack of love turned global when the Bank of England financial stability report revealed that the U.K.’s banks are deeply involved with Irish debts. Since Ireland’s debt rating was already downgraded by Moody’s last Friday, it didn’t cheer the pound bulls that the U.K.’s Lloyd’s Banking Group already wrote down 4 billion GBP worth of loans to Ireland, with the possibility of writing down another 26.7 billion GBP worth of loans by the end of next year.
Maybe this week’s roster of economic reports could turn things around for the Sterling. The preliminary mortgage approvals is scheduled for release today, and a number higher than last October’s 47,000 could signal improvement in the U.K.’s housing sector, a known sore spot for the economy.
Other hotshot economic reports due this week include details on public sector borrowing on Tuesday, current account, Monetary Policy Meeting minutes, and final quarterly GDP on Wednesday, and BBA mortgage approvals on Thursday.
Stick around for these reports, will ya?