Look down beloooooow!!! The markets roundhouse-kicked the pound all the way to the bottom of the charts yesterday when the U.K.’s GDP report surprisingly printed to the downside. Pound bears partied by 180 pips in GBP/USD at 1.5820; 185 pips in GBP/JPY at 130.13, and 120 pips in EUR/GBP. Yikes!
Yesterday the U.K.’s GDP report gave currency bulls heart palpitations when it surprisingly declined by 0.5% in the fourth quarter of 2010. While some say that bad weather is to blame, the first negative growth since the third quarter of 2009 still didn’t sit well with the markets.
Meanwhile, the country’s public sector borrowing eased to 15.3 billion GBP in December after clocking in at 19.7 billion GBP in November. This might have blunted the pound’s fall by a bit since public debt is one of the bigger monsters of the U.K. economy.
Let’s see how all these hoopla will factor in the BOE’s monetary policy decisions. At 9:30 am today we’ll get hold of the Monetary Policy Committee’s meeting minutes. Analysts expect the MPC to hold on to its wait-until-inflation-goes-down strategy, but keep close tabs and see if the MPC’s lone hawk Andrew Sentence managed to get a bro to his interest-rate-hike side.
The BBA mortgage approvals report will also be released at 9:30 am GMT. The number of mortgages approved by the BBA-represented banks is expected to slip to 29.25 in December from its 29.99 figure in November, but a lower number might drag the Sterling lower in the pip charts.
Constant vigilance, kids!
Britney Spears can learn a thing or two from the pound on how to make a comeback! The currency erased half of its losses against the dollar yesterday, bouncing off from an intraday low of 1.5770 and surging to its closing price of 1.5899.
And it’s all thanks to Martin Weale.
According to the most recent MPC minutes from the BOE, Weale sided with the most hawkish member of the committee, Andrew Sentance, and voted for a rate hike. The report also revealed that more MPC members acknowledged the threat of inflation. Aha, are hawks on the rise?
On the other hand, Adam Posen was still the only one who voted for further quantitative easing. It’s not too late for the sole dove to make his own allies though. Remember that the MPC meeting happened before the release of the GDP report which showed a 0.5% contraction in the fourth quarter of 2010. Perhaps we’ll see more committee members on Posen’s side in next month’s meeting.
Until then, I think our MPC chaps will have their eye on consumer spending. Note that some point to the snowstorms in the U.K. for the growth slump. And since weather conditions are getting better, retailers will have nothing else to blame other than a poor economy.
The first consumer spending report for January is on tap later at 11:00 am GMT so make sure you don’t miss it! A reading higher reading than 37.0 will probably be bullish for the pound as this would indicate a higher sales volume than what analysts are expecting.
Kaboom! Last Friday the pound dropped against its counterparts faster than Bruno Mars could say “I’m guilty” on a huge wave of risk aversion in markets and bad economic data from the U.K. GBP/JPY fell 171 pips to 130.28, while GBP/USD ended the day 66 pips lower than its open price.
The GfK consumer confidence report last Friday sent the currency bears running towards the pound as it printed at -29, the lowest level in 12 months. With the country’s consumer price index rocketing by 3.7% and its sales taxes up to the roof, who could blame the consumers for losing good vibes for the economy? The report also supported the MPC’s concerns that higher interest rates could further curb economic growth, so those high-yielding currency junkies had to look elsewhere for their interest ratehike fix.
The pound has plenty of chances to get back those bulls on its side this week when a couple of big-hitting reports are released. Tomorrow at 7:00 am GMT the Nationwide house price index will be released. Since the housing market is one of the sore spots of the U.K., economy, a figure lower than December’s 0.4% growth could push the Sterling lower in the charts.
The country’s manufacturing PMI will also be released tomorrow at 9:30 am GMT. Sentiment on the manufacturing industry has been surprising the markets to the upside for the past few months, so a reading lower than December’s 58.3 might attract more of them pound bears.
The last highlight of the week is the services PMI on Thursday at 9:30 am GMT. The report is expected to clock in at 51.1 in January from its 49.7 figure in December, but watch out for any surprises!
No reports were released from the U.K. yesterday, but the Sterlingpounded its counterparts down the charts on rising oil prices concerns. This motivated the pound bulls to push GBP/USD 170 pips higher at 1.6019, and GBP/JPY 158 pips ahead to 131.47.
For the past few days the political hoopla in Egypt has been the talk of the forex town. You see, too much trouble in Egypt could provoke government officials to shut down the Suez Canal, which could delay oil transportation. This could boost oil prices, and make it even harder for the BOE to control the U.K.’s already ballooning inflation. Since high inflation is usually controlled with higher interest rates, and the MPC hawks are growing in number, more traders are flocking to the pound.
We’ll see if the U.K.’s economic reports will keep them bulls interested when the Nationwide house price index is released at 7:00 am GMT. The housing industry is one of the sore spots of the economy, so a number lower than December’s 0.4% growth might dampen the buyers’ party.
Then, at 9:30 am GMT we’ll get hold of the manufacturing PMI. Sentiments on the manufacturing industry is expected to reach an index number of 58.0 for January, but a higher figure could send the pound rallying higher in the charts.
Don’t miss these hot reports, kids!
It looks like GBP/USD was able to seal its place above the 1.6000 mark as it climbed to a high of 1.6154 yesterday. GBP/JPY, on the other hand, was feeling a bit lazy as it stayed in consolidation around the 131.50 area. Let’s take a look at the economic data due from the U.K. to figure out where these pound pairs are headed.
Better than expected economic data lifted the pound’s spirits yesterday. First, the Nationwide HPI printed a mere 0.1% dip in house prices for January instead of the 0.3% drop expected. Then, the manufacturing PMI posted impressive results as it climbed from 58.7 to 62.0 in January. This record high PMI reading signifies that the U.K.'s manufacturing industry has expanded at a much faster pace during the month. Hooray for the U.K.!
Today, the construction PMI is the only piece of data on U.K.'s economic schedule. Let’s see if the construction industry also posts an impressive figure just like the manufacturing industry. The index is expected to climb from 49.1 to 49.8 in January but better than expected results could allow the pound to push for more gains. Stay tuned for the actual report due 9:30 am GMT!
'Twas another good day for the pound! Even though its peers were being clobbered by the U.S. dollar yesterday, the pound managed to hold on to its recent gains and stay safely above 1.6150. GBP/JPY’s performance was even better as it made its way past the 132.00 level.
As I mentioned in my U.K. commentary yesterday, the construction PMI was also expected to post an upside surprise… and it bloody did! The index climbed from 49.1 to 53.7 in January, surpassing the consensus at 49.8. Since the reading is now above 50.0, it indicates that the construction industry is already starting to expand. Because of that, pound pairs enjoyed a strong rally even when risk aversion was starting to weigh on the other currency pairs.
Today, the services PMI is due and we could be in for another upbeat result. The index is projected to rise from 49.7 to 51.2 in January, also indicating that the services industry is expanding. Stay tuned for the actual figures due 9:30 am GMT because strong results could push pound pairs much higher.
The pound bulls suffered an early February heartache yesterday when the currency bulls rained on their parade. After reaching week highs against its counterparts, the poundslipped and ended the day on the red. GBP/USD reached an intraday high of 1.6190 before closing at 1.6144, while GBP/JPY was enjoying an intraday high of 132.96 when the bears attacked and pushed it to 131.70. Talk about party pooper!
Blame it on risk aversion in markets! The U.K.’s economic report was bullish enough, with the services PMI clocking in at 54.5, up from its 49.7 figure in December. Recall that an index reading of 50.0 and above for the purchasing managers in the services industry could signal improving employment conditions, and eventually more consumer spending. Boo yeah!
Too bad that ECB President Jean Claude Trichet cast a dark cloud over risk appetite! In his dovish speech yesterday, Trichet remained firm on the ECB’s decision to keep its interest rates at 1.00%. Since the ECB and the BOE were both in the spotlight for an interest rate hike, a 0-1 score for the rate hike groupies dampened risk appetite.
Maybe the pound will have a chance at getting back its gains today when the U.K.’s Halifax house price index is released at 8:00 am GMT. The housing market is one of the red spots in the U.K. economy, so watch this one closely for any surprises!
Good data, mixed results! That basically sums up the pound’s performance last Friday. Though the Halifax HPI gave it a bit of support, it couldn’t overcome the dollar as Cable dropped 45 pips to close at 1.6099. GBP/JPY, on the other hand, was able to rack up another positive day as it climbed 64 pips to 132.34.
According to the latest Halifax HPI release, house prices rose 0.8% in January. And boy, what a surprise this was! Forecasts were for a 0.2% decline, following the 1.1% slide in December. But I’d hold off the celebrations for now. The housing market is a sore spot for the U.K., and it will probably remain fragile in the coming months in light of low consumer confidence.
Strap on your trading hats, kids, ‘cause we’ve got heavy events on the docket this week! The day to watch out for is Thursday, as the U.K. is scheduled to make big releases on this day.
They’ll start the day off with the manufacturing production report at 9:30 am GMT. This time around, analysts are expecting to see a 0.5% rise in production following December’s better-than-expected increase of 0.6%.
After that, the BOE will be making its official rate decision at 12:00 pm GMT and its monetary policy statement later in the day. Though the asset purchase facility will probably remain at 200 billion GBP and the official bank rate at 0.50%, it would be wise to catch the announcement. You never know what kind of pound-rocking words will be dropped!
Friday clinches the week with the PPI input report. As you know, inflation has been a pain in the BOE’s neck. A strong reading from this report will likely cause the pound to rally as it would imply strong future consumer inflation. The release is slated to print a 1.3% uptick following December’s 3.4% rise. Catch it at 9:30 am GMT!
“Let’s just call it a draw!” said the pound to the dollar as it stalemated against its American counterpart. With no economic data on tap, it found little reason to rally and GBP/USD closed practically unchanged at 1.6107 after a brief climb to 1.6186.
It was an unusually quiet day in the U.K. yesterday. The lack of economic releases resulted in a snoozer of a day and it looks like we may get more of the same today.
The only reports scheduled for today are a couple of tier 2 reports that have yet to get the pound moving. Just a few moments ago, the BRC retail sales monitor printed a 2.3% rise to follow up its 0.3% decline in December. If you recall, bad weather resulted in poor sales back in December, so an improvement was widely expected in January.
Also, the RICS house price balance report printed better than expected. A 38% tick down was expected, but instead, only 31% of the surveyed surveyors reported drops in house prices. Clearly, the housing market isn’t out of the woods yet, but at least its decline is easing.
With no more hard-hitting releases scheduled today, you may want to keep an eye out for risk sentiment. If risk sentiment turns sour, it may be the bears’ turn to take over the pound.
The pound bears sent the Sterling down the charts yesterday even though United Kingdom released better-than-expected economic data. GBP/USD slipped by 35 pips to 1.6072, while GBP/JPY dipped by 24 pips after dropping to an intraday low of 131.57.
The BRC retail sales report should’ve gained the pound some pip love when it grew by 2.3% in January from its 0.3% drop in December. In fact, the BRC shop price index also managed to print a 2.5% gain in January, up from December’s 2.1% figure. Hmm, is this because my chaps over in the U.K. are starting to buy Will and Kate’s wedding collectibles?
In other news, the RICS house price balance only showed a -31% figure in January, which means that there are less property geeks reporting a decline in house prices than there were in December. Since the housing market is one of the biggest headaches of the BOE, the better-than-expected data might help the pound inch higher against its pip buddies.
Let’s see if the U.K.’s trade balance report due today at 9:30 am GMT will finally attract the bulls’ attention. A surge of expensive oil imports widened the country’s trade deficit to 8.7 billion GBP last November, so an even higher deficit figure for December could send the pound plunging further in the charts.
Be careful in your trades, folks!
Ain’t no trade balance data gonna hold the pound down, brotha! GBP/USD was able to power through a disappointing trade balance report to finish just above the 1.6100 handle, recording a 32-pip gain for the day.
The U.K.’s lone release revealed that its trade deficit expanded to its highest level since August 2005. Instead of showing a deficit of 8.6 billion GBP as forecasted, December delivered a disappointing 9.2 billion GBP deficit. The details of the report revealed that imports picked up 3.5% thanks to a large order of aircrafts late in the year, while exports only grew 1.5%. It seems that the bad weather in December took its toll on exports as well, according to the National Statistics office’s studies.
But enough about yesterday’s news, the big day is finally upon us!
The action begins with the manufacturing production report for December. According to forecasts, we’ll probably see a 0.5% uptick following November’s 0.6% rise. But could production have been affected by December’s bad weather, too? We’ll find out together at 9:30 am GMT!
Then at 12:00 pm GMT, the BOE will be making its rate decision. With austerity measures only recently being implemented, don’t expect any changes to be made to the asset purchase facility and the current rate of 0.50%. More interesting to hear is what the MPC has to say about the current state of the economy when it makes its monetary policy statement. We’ve been seeing positive data lately, and it might just cause MPC members to speak more hawkish than usual. Pound bulls feed off hawkish words, so y’all should be on the lookout!
The pound got to tread on both the winning side and the losing side as yesterday’s weak data and rate decision failed to move the currency in a single direction. While Cable dropped slightly from 1.6104 to 1.6091, GBP/JPY rallied hard to post a 138-pip gain and close at 134.03.
Yesterday’s manufacturing production report was a bit of a downer. Word is that production fell 0.1% in December, which is nothing close to the 0.5% growth that was widely expected. And guess what? I was right about the weather! Bad weather in December had a lot to do with the disappointing results.
Moving on, the BOE once again sat on its hands and kept the official bank rate at 0.50% and left its asset purchase facility untouched at 200 billion GBP. Though inflation has been as stubborn as a mule in the U.K., the central bank has decided to hold off rate hikes in light of the economy’s shaky recovery.
With this strategy, it runs the risk of letting inflation balloon out of control and may be forced to increase rates at a more critical time. This is quite a big gamble on the BOE’s part and it will be interesting to see if this will pay off in the long run.
Also noteworthy is the fact that NIESR’s GDP estimate forecasted a 0.1% contraction in January. Hmm… Is a double-dip recession right around the corner?
Let’s see if today’s PPI input data will add to the BOE’s headaches. The producer price index is expected to show a 1.3% rise in prices following December’s 3.4% uptick. Be sure to catch this release because a higher-than-expected figure would imply stronger future consumer inflation, which could boost the pound higher.
The pound took another tumble last Friday even though economic figures from the U.K. came in stronger than expected. GBP/USD slid from its open price of 1.6092 to a low of 1.5964 before closing just a couple of pips above the 1.6000 handle. Meanwhile, GBP/JPY dropped almost a hundred pips from Friday’s open price of 134.24.
U.K. reported that producer prices were up by 1.7% in January, a few notches better than the predicted 1.3% uptick. Aside from that, the December figures were revised upwards to show that producer price levels rose by an eye-popping 3.9%. Well, you know what that means for consumer inflation and the possibility of a BOE rate hike!
However, the pound didn’t react to this good news the way it usually does. You see, higher inflationary pressures could be a reason for a rate hike, which should be bullish for the currency. Instead, the pound endured a beating from the Greenback and the yen last Friday. I guess the strong inflationary report just reminded market participants that the BOE is still unlikely to hike rates because it is worried about the impact of future austerity measures on its economy. And that means consumer inflation could just keep rising and rising, which could eventually hurt spending and overall growth.
The U.K. will take a break from releasing economic data today. On Tuesday, it is set to report its CPI figures for January, which could show that annual inflation is up by 4.0%. Stay on your toes for an upside surprise, knowing that producer prices came in much better than projected.
On Wednesday, the BOE could shed some light on the recent surge in inflation and their outlook for the economy as they release their Inflation Report. Along with that, Nationwide consumer confidence is also due and this could show a drop from 53 to 49. Also, BOE Governor Mervyn King is set to give a speech that day. Quite a busy day, don’t you agree?
But the excitement doesn’t end there! On Friday, the U.K. is set to release another top-tier report. This time it will report its retail sales figures for January. The report is expected to print a 0.6% rebound after seeing a 0.8% decline in December. Plenty of opportunities to trade the news this week, so make sure you keep your eyes peeled for those reports!
Pound pairs took a breather from their recent declines as GBP/USD fought to stay above the 1.6000 handle while GBP/JPY managed to find support around 133.30. Well, the U.K. was report-free yesterday so let’s see how it’ll fare today.
U.K. is set to release its CPI figures today at 9:30 am GMT. The headline figure is projected to post a 4.0% annualized increase in price levels, much higher than the previously reported 3.7% rise. Recall that the PPI input and output figures released last week came in way above expectations, which means that the overall CPI could also be in for an upside surprise. Pound traders seemed to be displeased with this surge in inflation so, if the actual CPI reading surpasses the consensus, pound pairs could resume their dive.
Also due today is the BOE inflation report, which could shed more light on the central bank’s inflation and growth outlook. What traders are probably more interested in are the plans of the BOE on how to tackle the spike in inflation and whether they are likely to hike rates or not. Make sure you keep your eyes and peeled for that data release because it’s bound to rock the pound!
Up, up, and away! The pound decided to take its cue from rising inflation and staged a rally of its own yesterday. Cable climbed 83 pips and finished at 1.6122 while GBP/JPY rose 157 pips and landed at 135.14.
The pound soared on news that U.K.’s CPI rose from 3.7% to 4.0% last month. Even though it was widely expected, pound traders couldn’t help but buy up the pound when they saw inflation pick up to its highest pace in two years.
Aside from the sharp increase in oil prices that we saw in January, prices in the U.K. were lifted by the VAT hike that was implemented last month.
Because of the high figure, BOE Governor Mervyn King was forced to write another letter to the government, explaining why prices are still on the rise. He admitted that inflation will probably stay above the BOE’s target in the next two to three years, and that inflation may rise to 5% in the coming months. Yowza! At this rate, I wouldn’t be surprised to see a rate hike or two by the end of the year!
We’ve got employment data coming our way at 9:30 am GMT. The claimant count report is anticipated to show a decrease of 3,200 following the 4,100 tick down in December.
Also, the BOE has more words for us to ponder upon later in the day. King is scheduled to speak at 10:30 am GMT when the BOE inflation report is due. I, for one, am anxious to hear straight from the horse’s mouth what the BOE’s views are regarding the whole inflation situation. Be sure to listen closely for any clues about how soon we can expect a rate hike!
Mirror, mirror on the wall, who’s the biggest loser of them all? The pound, of course! During yesterday’s trading, GBP/USD fell 200 pips to its intraday low from 1.6187, before it ended the day at 1.6095.
With each report in yesterday’s lineup coming in worse-than-expected, I’m not surprised that the pound became the sole currency not to benefit from risk appetite and lose against the dollar. Let’s take a look at them, shall we?
First there was the claimant count change report which showed that the number of people filing for unemployment benefits rose by 2,400 in January when the market was expecting it to fall by 3,200. The average earnings index for October to December 2010 also missed its 2.0% forecast when it came in at 1.8%.
Meanwhile, the unemployment rate remained steady and hit the consensus at 7.9%.
Then there was BOE Governor Mervyn King’s remarks, clarifying that the BOE won’t be hiking interest rates anytime soon. Ouch! He spoke soon after the bank’s inflation report was released which revealed that our central bank chaps expect inflation to come in at around 4%-5% before falling to its target of 2%.
I wonder if MPC member Andrew Sentence will be able to provide the pound some support on the charts when he speaks later at 9:35 am GMT. Take note that many regard him as the most hawkish member of the committee.
Also, the CBI Industrial Trends Survey for February is on tap at 11:00 am GMT. Analysts are anticipating it to show that manufacturers expect job orders to decrease with the index eyed at -11 but if it comes in better than expected, the pound may just pare some of its losses. So watch out!
With a hawk on its side, nothing kept the pound from being a rocketeer in yesterday’s trading. GBP/USD traded higher almost as soon as it opened at 1.6095 and zoomed all the way up to 1.6169.
Once again, MPC hawk Andrew Sentance saved the pound from the bears when he called for another interest rate hike. He said that the bank’s inflation forecasts were too optimistic and a hike is needed to bring inflation back within the BOE’s target.
The CBI industrial trends survey also supported Sentance’s point. Looking past the -8.0 figure, which indicated that manufacturers are more optimistic about their sales volume compared to what analysts had forecasted at -11.0, it also reflected that businesses expect to raise their output prices soon.
Does this mean the pound will end the week in the bull turf?
If you ask me, I think that its fate on the charts will primarily depend on the retail sales report for January which is due later at 9:30 am GMT. The forecast is up at 0.6% as analysts expect to see a correction after the report showed a 0.8% decline in consumer spending in December due to bad weather. Forex Gump has a couple of tips in his blog yesterday to help you trade the news. Check it out!
Along with that, we’ll also have the preliminary mortgage approvals figure for January. A figure higher than the 46,000 reading that the market expects will probably be bullish for the pound so watch out for that!
Don’t get too carried away rooting for the pound though. Note that at 1:00 pm GMT BOE Governor Mervyn King will again take center stage and he may just give the markets some dovish mumbo jumbo.
The pound looked weightless the way it flew up the charts last Friday! With a solid retail sales report providing the wind beneath its wings, the currency lifted off and carried GBP/USD 65 pips higher to close at 1.6234.
After the dismal performance in December, which saw a 1.4% drop, retail sales bounced back in January to show a 1.9% increase. That ain’t bad at all considering investors were only expecting to see a 0.6% uptick!
This is actually the biggest monthly gain since February 2010, and it brings January’s year-on-year increase to a respectable 5.3%. As a matter of fact, this figure is so uplifting that people are starting to write off the economic contraction in Q4 as just a temporary setback!
Will the pound capitalize on more positive data this week?
Well, it’s already off to a good start. The Rightmove HPI report released a couple hours ago revealed that the rise in house prices accelerated from 0.3% to 3.1% in February. But it seems pound bulls are still hungover on the weekend as they haven’t been buying up the pound much since.
This week, we have the all-important MPC meeting minutes on tap. Believe me when I say that this could be a BIG ONE! Some say BOE members Sentance and Weale may find a third member for their hawkish camp. Don’t miss the release when it comes out at 9:30 am GMT!
Then Friday, we’ll revisit UK GDP data. Will growth stay unrevised at -0.5% or will we receive an upside surprise? See for yourself at 9:30 am GMT!
Because risk aversion was the name of the game during yesterday’s trading, the pound got outshone by the dollar just like LeBron was by Kobe in the NBA All-Star Game. GBP/USD opened at 1.6256 and traded lower all throughout the day, closing at 1.6226.
Apparently, a stellar housing report wasn’t enough to get traders rooting for the pound. Yesterday the Rightmove house price index for February showed that asking prices of homes were more than ten times higher during the month at 3.1% than they were in January. Yowza!
As I said before, we won’t have a lot of reports this week from the U.K. However, I bet that the BOE minutes of the most recent BOE-MPC meeting will make a loud noise on the markets on Wednesday. Word on the street is that MPC members Andrew Sentance and Martin Weale might have found another hawkish bro in Charles Bean!
If these rumors are indeed true, then we may just see the pound tap a new 3-month high against the Greenback! So make sure you tune in to that tomorrow at 9:30 am GMT.
Until then, clear your schedule for the public net sector borrowing report for January due later at 9:30 am GMT. It looks like economic hotshots are keeping their expectations on the down low though. The forecast is for a 200 million GBP deficit to follow the 15.3 billion GBP surplus we saw in December.
But be on your toes for a better-than-expected figure as this may help the pound pare some of its losses against the dollar.
Traders dropped the pound like it was hot during yesterday’s trading. Tss! GBP/USD opened at 1.6218 and fell to a low of 1.6101 before ending the day at 1.6130. Meanwhile, GBP/JPY spiked up to 135.50 before tumbling to its closing price of 133.49.
It must have been a total bummer for pound bulls that risk aversion overshadowed the positive report we got from the U.K. yesterday.
It was reported that the U.K.’s public net sector borrowing fell by 5.3 billion GBP in January. Not only did the figure beat the expected 200 million deficit that the market was eyeing, but it also translated to the most moolah we’ve seen the public sector lend since July 2008!
But don’t fret! Perhaps the pound will be able to end today’s trading in the bull turf with the BOE minutes. As Forex Gump wrote in his blog yesterday, Andrew Sentance might have found another hawkish brotha in Charles Bean.
So make sure you get dibs on what our BOE chaps talked about in their most recent meeting when the minutes are released later at 9:30 am GMT. If these rumors are indeed true, we’ll most probably see the pound rise as this would get markets giddy for another interest rate hike.
If not, then the pound may just continue to tumble further down the charts.
Oh yeah! The BBA mortgage approvals report for January will be released along with the minutes. If you feel like showing the pound some love, keep your fingers crossed for a figure higher than the expected 29,000 approvals.
Good luck!