Good luck trying to find buyers for the pound! Hah! After seeing yesterday’s dismal retail sales data, everyone was quick to ditch the British currency! GBP/USD posted a 113 decline to 1.6122 just as GBP/JPY tumbled 82 pips to 130.55.
Being the only release for the day, the retail sales report had everyone’s attention yesterday. Unfortunately, it couldn’t quite deliver the good news bulls were hoping to receive. You could almost hear the sound of thousands of bull-hearts breaking when it was revealed that retail sales fell 0.8% last month, even worse than the 0.5% decline that was forecasted.
Hmm… It seems the dovish members of the BOE do have reason to be worried. Those who have voted against rate hikes have argued that domestic demand has been extremely weak and could weaken further if the central bank makes an ill-timed rate increase. Not only does yesterday’s disappointing retail sales report strengthen the doves’ arguments, but it’ll also make the BOE less likely to change to its current monetary policy stance.
And with that report, the U.K. ends its week! In the meantime, check in on what the U.S. has in store if you’re looking for a bit of Cable action. It’s supposed to publish its final GDP figures today, and it may be worth catching the release just in case it prints unexpected results.
Unlike Casey of American Idol, the pound didn’t have a J.Lo in Friday’s trading to keep it from getting booted from its intraday high against the dollar. GBP/USD fell more than a hundred pips from its peak at 1.6143 and ended the day 80 pips lower from its opening price at 1.6042.
So why did traders give the pound thumbs downs?
I have a feeling that bulls still weren’t over the disappointment of February’s retail sales report. But it might have been Moody’s rendition of a credit downgrade for Britain that made things worse for the pound. It said that slower growth and a not-so-impressive plan for fiscal consolidation may not make the U.K. AAA-worthy. The hotshot credit ratings agency cautioned Chancellor of the Exchequer George Osborne that if his GDP forecasts for 2013 and the succeeding years prove to be too optimistic, it the U.K. could its credit status. Yikes!
Adding more insult to the pound’s injury might have also been BOE Chief Economist Spencer Dale who said that he isn’t confident on the U.K.’s recovery. Ouch! In a speech in London, he said that it may take a while for the Britons to adjust to the austerity measures. Consequently, this could result to consumer spending being on the down-low for some time.
We don’t have any economic report on tap for the pound today. So you may want to keep tabs on market sentiment to see if the currency can recover some of its losses. Don’t worry because tomorrow we’ll have a chock-full of data from the U.K.
At 8:30 am GMT, the current account figures for the fourth quarter of 2010 will be on tap. A wider deficit of 10.3 billion GBP is expected to follow the negative 9.6 billion reading we saw in the third quarter. The final version of the fourth quarter GDP will also be on tap and it is anticipated to show that the economy contracted by 0.6% during the quarter. Then the BOE will release its data on the total value of new credit it issued in February. The bank’s net lending to individuals is predicted to have amounted to 1.2 billion GBP during the month.
These are the top-tier economic reports we have scheduled from the U.K. tomorrow. For the pound to be able to make it back to the spotlight, we may have to see better-than-expected figures. So be on your toes! Other than these, we’ll also have third-tier data on mortgage approvals, money supply, and business investment.
The pound just can’t catch a break eh? After gapping down to start the week, GBP/USD soon found itself testing for new lows below the 1.6000 handle. While the pair did recover some of its losses, it wasn’t enough to prevent GBP/USD from closing 11 pips lower for the day, bringing the pound’s losing streak to four.
The big sinker to pull down the pound was concerns about the state of Irish debt. News over the weekend came out that some Irish debt would need to be restructured. What this basically means is that even Irish officials aren’t confident about the state of Irish bonds.
With U.K banks heavily exposed to Irish debt, this became a cause for concern as restructuring could possibly lead to deep losses for those banks. This in turn sparked a wave of risk aversion that only weakened sentiment towards the pound.
Looking at today’s lineup, we’ve got the current account, final quarterly GDP data, and the net lending to individuals report all coming out at 8:30 am GMT.
The current account is expected to show a deficit of 10.5 billion GBP for the last quarter of 2010, up from the 9.6 billion GBP the quarter before. This indicates that even more goods are expected to have been imported during that quarter.
The final quarterly GDP report for the Q4 2010 is also due, and no changes are expected to be made from the previous two reports which showed a contraction of 0.6%. I don’t expect this to cause too much volatility in pound trading.
Lastly, credit conditions are expected to have been deteriorated a little bit, as net lending to individuals is seen to have dropped to 1.3 billion GBP, down from the 1.8 billion GBP figure we saw last month.
Watch out for any worse than expected results from these data reports, as they might just spark another round of pound selling!
Despite the release of good economic data, the pound just couldn’t push past the dollar yesterday and remained in range. GBP/USD tested near the previous day’s high and low before finally settling at 1.5996.
While current account figures came in line with expectations to show a deficit of 10.5 billion GBP, both GDP and net lending figures came in as pleasant surprises.
First, the final GDP report showed a revision in GDP growth for the 4th quarter, up from 0.6% to 0.5%. Then, the net lending to individuals report indicated improving credit conditions, as it printed a figure of 2.0 billion GBP, much higher than the anticipated 1.2 billion GBP.
Still, the good news wasn’t enough to give pound bulls enough fuel to push GBP/USD higher. Part of the reason was overall dollar strength. However, the main reason may be that traders aren’t seeing any evidence for the BOE to consider an interest rate hike. Remember, this was the main reason why the pound has been so bullish this 2011. If data continues to show that the U.K. economy is still stuck in a rut, then BOE officials will probably think twice before raising interest rates.
For today, watch out for the CBI distributive trades report coming out at 8:00 am GMT. This index is a measure of current sales volume based on surveys given to retailers. The index is expected to print at -2, indicating that sales fell slightly in March. Take note that this would mark the fourth consecutive month of falling sales, which I find worrisome. Why? Because it happened during the holiday season, when spending should pick up! If we see a worse-than-expected figure in today’s report, it might just trigger another round of pound selling.
Finally! After chillin’ like a villain at 1.6000 for a couple of days, the pound was able to stage a big comeback in the bull turf like my buddy Arnold Schwarzenegger who is going back to mainstream entertainment as The Governator! GBP/USD ended yesterday’s trading 85 pips higher at 1.6082.
If you’re wondering what gave pound its superpower, look no further than our economic calendar. You’ll see that all reports yesterday came in better than expected. Let’s take a look at them, shall we?
First there was the index of services report which showed that gross value added on services provided only declined by 0.5% in January. Although still on the red, the actual figure was still 0.1% better than the consensus.
The CBI realized sales report for March must have also helped the pound hustle some muscle when it came in at 15.0, impressively beating the market’s -1.0 forecast. However, analysts at CBI think that the data might only be reflecting the higher value added tax and inflation; not necessarily stronger consumer spending.
Lastly, there was the consumer confidence report by GfK which showed that the Britons’ outlook for the economy in March wasn’t any worse that it was in February. The index remained steady and matched its previous reading at -28.0. Not really something to go gaga for, but hey, it came in a point better than the -29.0 reading that the market was eyeing.
I wonder if the tier-one Nationwide HPI report, due at 6:00 am GMT, will be able to provide the pound the enough support for it to extend its gains. Analysts have predicted that selling price of homes backed by Nationwide fell by 0.1% in March after posting a 0.3% increase in February. If your planning to root for the pound, watch out for a better-than-expected figure as this would probably help spur its rally!
The pound was feeling generous in giving away pips to the dollar yesterday’s trading. Aaw, ain’t that sweet? Err, no. GBP/USD fell from its intraday high of 1.6152 all the way down to 1.6016 where it bottomed. Good thing it was able to pare some of its losses and close the day at 1.6044.
Despite high inflationary pressures in the U.K., it seems like markets have understood the BOE’s dilemma of hiking interest rates given the sluggish pace of growth in the country that was reiterated by BOE MPC member David Miles. In a speech to the Home Builders Federation yesterday, Miles said that the expectations for the standard of living in the country have been “shaken” as consumers go through a “painful transition.” Yikes!
On other news, the Nationwide HPI for March printed a 0.5% uptick and overshot the consensus forecast which was for 0.1% decline. I think speculations about the BOE pulling off its wait-and-see approach offset the good vibes the might have come from the positive housing report. It might probably even be the reason why pound tumbled to its five-month high against the euro at .8854 as the monetary stances between the BOE and the ECB begin to diverge.
For today, we only have the Manufacturing PMI for March scheduled to be released at 8:30 am GMT. Watch out for a figure higher than the expected 60.7 as this could probably be bullish for the currency. Who knows, it could convince traders to root for the pound as a positive figure would tone down the pessimism over the U.K. economy.
Risk sentiment was ON like Donkey Kong last Friday after the big NFP report from the U.S. printed much better than markets had expected. As a result, pound bulls shrugged off a disappointing report from the U.K and hustled GBP/USD 71 pips higher at 1.6115. Meanwhile, GBP/JPY also rose by a whopping 208 pips to 135.54. Talk about a fun, fun, fun Friday!
The pound nearly had a bad day last Friday when the U.K. manufacturing PMI report disappointed expectations. The data clocked in a reading of 57.1 in March, which signals that manufacturing managers expect a slower industry expansion than markets estimated (a 60.7 figure)
Let’s see if the pound bulls wake up on the right side of the bed for another day after the U.K.’s construction PMI is released at 8:30 am GMT. Recall that a reading higher than 50.0 means that construction managers expect expansion.
On Tuesday we’ll also get hold of the Halifax house price index, followed by the services PMI at 8:30 am GMT and the BRC shop price index at 11:01 am GMT. Around the same time on Wednesday we’ll also see the manufacturing production report for February.
And let’s not forget the big MPC interest rate decision on Thursday at 11:00 am GMT! While market geeks aren’t expecting an interest rate hike despite its uber high inflation rate, it would be interesting to see how many blokes joined the MPC’s hawk camp.
Good luck in your trades this week!
The pound trended on the bulls’ Twitter feed like #justinbeiber as soon as positive data was released from the U.K. GBP/USD tapped an intraday high of 1.6178 before ending the day with a 14-pip win at 1.6126.
Yesterday, the Construction PMI for March wowed traders when it printed near its 8-month high at 56.4. Analysts had anticipated activity in the sector to have lost a lot of momentum during the month after coming in at 56.5 in February. The forecast was only at 54.7.
I wonder if the Services PMI will also sweep the market off its feet later at 8:30 am GMT. A very modest slowdown in service sector activity is expected with the forecast for March down at 52.5 following February’s reading of 52.6.
Traders will have their eyes peeled for the report fosho, and so should you! We’ve seen improvements in the British economy here and there, but most economic gurus remain skeptical of its recovery. And so, a better-than-expected figure may just help ease the pessimism and consequently boost the pound on the charts!
It’s hunting season baby! Did you see the pound shoot down bears yesterday? Bears on GBP/USD got fried when it skyrocketed up the charts to close the day at 1.6278 with a 153-pip win. Meanwhile, GBP/JPY ended the day a whopping 257 pips above its opening price at 138.08. Boo yeah!
The better-than-expected Services PMI report for March definitely swept the market by surprise. Following its 52.6 reading in February, the index clocked in at its 13-month high at 57.1, making the 52.5 forecast seem plain ridonculous! And the good vibes didn’t just end there, no sir! Digging further into the report I discovered that the employment component of the report showed its first increase in 9 months.
However, as awesome as the report was, I don’t think it will be enough for the BOE to announce an interest rate hike in its monetary policy statement tomorrow. Drats! It might be enough for BOE Governor Mervyn King to sound a tad more optimistic though. Hmmm, I wonder if today’s reports will also support that thesis and boost the pound.
Manufacturing data for February is on deck later at 8:30 am along with industrial production. Analysts have predicted that output of manufacturers picked up by 0.6% during the month. On the other hand, activity in the overall industrial sector is seen to have increased by 0.4%.
Then at 2:00 pm the NIESR GDP estimate for March will be released. If the calculation of hotshots at the NIESR comes in higher than the 0.2% growth we saw in February, the pound may just continue its rally!
The pound bulls and bears were as scattered as the boys of Hangover 2 yesterday as they pushed the currency in different directions. While GBP/USD tacked a 55-pip gain at 1.6334, EUR/GBP also rose by 39 pips to .8775. What’s up with that?!
It seems that the currency bulls took it easy on the pound yesterday after worse-than-expected economic reports popped up from the U.K. For one, the industrial production report unexpectedly declined by 1.2% in February, the biggest fall since October 2009. Meanwhile, manufacturing production on the same month failed to register growth at 0.0%. Good thing the Halifax house price index ticked 0.1% higher in March, signaling that the U.K.’s housing market is slowly chugging along from its 0.9% decline in February.
Today all eyes will be on the BOE’s Monetary Policy Committee’s interest rate decision at 11:00 am GMT. While market geeks aren’t expecting an increase from the BOE’s 0.50% interest rates, traders will be at the edge of their seats to see what the MPC hawks and doves have to say about rising prices and slow growth in the country.
With no expectations from the BOE rate decision, Cable stayed steady in yesterday’s trading. GBP/USD traded well within its daily average true range and closed just 13 pips lower for the day at 1.6320.
As expected, our buddies over at the Bank of England did not make any changes to their asset purchase facility nor did they hike interest rates. This made the BOE rate decision a snoozer, as everyone decided to watch what their European counterpart, the ECB, would do instead.
It seems that BOE officials are still divided as to what direction to take with monetary policy. On one hand, inflation is waxing hot like Blake Lively (have you seen the trailer for Green Lantern!?). On the other hand, it isn’t like the British economy is chugging along like a well-oiled machine. I’m looking forward to minutes of the meeting to see just how divided the BOE could be on this issue.
Speaking of inflation, producer price input figures are due today at 8:30 am GMT. Expectations are that producers are paid 2.2% more for their raw materials. Remember, this report is a good indicator of inflation, as producers are highly likely to pass on any additional costs to consumers to bear the burden. If today’s report comes in to print a higher figure, we could see the pound get a nice boost across the board, as this would raise speculation that the BOE will follow the ECB’s lead in raising interest rates.
Despite the strong resistance at the 1.6400 handle, GBP/USD refused to back down last Friday as it ended 48 pips above its day open price of 1.6315. Meanwhile, GBP/JPY stopped in its tracks at 140.00 before closing at 138.84.
The pound was able to score another day of wins against its major counterparts after the U.K. printed better than expected producer price reports. The PPI input showed that the prices of goods and raw materials purchased by manufacturers jumped by 3.7% last month while the PPI output figure printed a 0.7% increase. On top of that, the PPI input reading for February was revised upwards to show a 1.4% rise.
As we all know, if producer prices keep climbing, manufacturers will eventually have to sell their products at higher prices. This means that the costs will be passed on to consumers and this will lead to higher consumer inflation. The ECB responded to stronger inflationary pressures by hiking interest rates last week. Is the BOE feeling the pressure to do the same? If central bank officials start hinting at a possible rate hike, the pound could do a Far East Movement number and Rocketeer across the charts!
Of course this still depends on the upcoming economic data. For this week, the U.K. CPI report is one of the red flags on deck and this is due tomorrow 9:30 am GMT. Along with that, the retail price index is also set for release. Keep in mind that stronger than expected results could allow GBP/USD to break above 1.6400 and GBP/JPY to soar past 140.00.
On Wednesday, the spotlight will shift away from inflation data to labor reports. The claimant count change is due 9:30 am GMT that day and it could print a 3,100 decrease in joblessness for March. This could keep their unemployment rate steady at 8.0%.
That’s all, folks! Don’t forget to keep an eye out for any shifts in market sentiment because this could rock the pound this week too!
Sell, sell, sell! Pound traders were all about selling yesterday as they had little reason to hold on to the currency with only light economic data on tap. As a result, Cable ended the day 30 pips lower at 1.6348 after a failed attempt to close above the 1.6400 handle.
Yesterday’s selloff was an interesting market move, seeing as it happened ahead of the release of the U.K.’s CPI report later at 8:30 am GMT. Yesterday’s price action was in contrast to the pound’s behavior in the past, which saw pound gains prior to the release of the report. Could this pound weakness be a reflection of the market’s expectations?
Forecasts have CPI clocking in at 4.4%, the same rate as that of February. However, given the pound’s recent strength, there’s a chance the actual results may come in below expectations. Weak consumer demand, as evidenced by the 3.5% drop in the March BRC retail sales monitor (versus the February’s 0.4% decline), is also expected to weigh down on inflation.
If that’s the case, and CPI does print below forecast, expect traders to sell the pound like it was going out of style! But on the other hand, if CPI picks up, it may just breathe life into the pound and send it back up the charts.
I said a bang, bang, bangity-bang, a bang, bang, bangity-bang! Thanks to weaker than expected economic data and general risk aversion, the pound got blown out of the water yesterday. GBP/USD dropped nearly 100 pips to finish at 1.6264, while GBP/JPY slid 220 pips all the way down to 136.13!
The main culprit in yesterday’s shootout was the consumer price index. The index was way off the predicted 4.4% figure, as it printed year-on-year inflation to be at 4.0%. This indicates that inflationary pressures may be dying down, which could give the BOE reason NOT to hike rates any time soon. As a result, we saw the pound take some bullets to the chest as it fell right after the release of the report.
Remember, one of the main themes in the market right now is interest rates, so it’s no surprise that this report caused quite a ruckus in the markets.
In other news, the U.K printed a smaller trade deficit, printing at 6.8 billion GBP for the month of February. This was much better than the expected 8.1billion GBP, and a nice improvement from the previous month’s deficit of 7.8 billion GBP.
The important thing to note here is that the narrowing of the deficit was due to the rise in exports to non-EU countries, which rose 7.6%. With many EU countries struggling right now, developing trade relationships with non-EU countries will be crucial over the next few months.
Will the pound bounce back today? Or will it head even lower down the charts? Tune in at 8:30 am GMT, when the weekly claimant count change report will be released. Word is that 3,000 less people filed for jobless claims last month, which would be a nice follow up to last month’s figure of 10,000. Be careful though, because if this report comes in worse than expected, we might just see another round of pound selling! Good luck!
The pound was as chill as a snow cone in winter! It simply shrugged off yesterday’s not-so-upbeat employment data and refused to give in to bearish pressure. GBP/USD finished the day 14 pips higher at 1.6267 while GBP/JPY ended 25 pips higher at 136.32.
The release of last month’s employment figures didn’t really do much to shake up the markets as the pound stayed in consolidation for most of the day. Hmm… I suspect the mixed feedback from the labor market had something to do with this.
On one hand, the claimant count change was worse than expected, printing an increase of 700 instead of a decline of 3,600 in the number of people claiming unemployment benefits. But on the other hand, the unemployment rate dropped from 8.0% to 7.8%. What gives?!
One possible explanation as to why claims for unemployment benefits rose was because of a change in the requirements for eligibility of single-parent benefits. With more people qualified to claim benefits, it’s only natural to see the number of claims rise.
Also interesting was how the average earnings index showed just a 2.0% rise in earnings, in contrast to the 2.6% rise that was forecasted. This is particularly noteworthy because it means that despite the insanely high inflation in the U.K., workers haven’t been clamoring for higher wages. So basically, it suggests the maybe inflation has been manageable after all! This, in turn, may help ease pressure off the BOE to raise rates down the line.
The economic calendar will be blank for the U.K. today. But y’all should keep your eyes and ears open for the G7 meeting scheduled to take place today. Whatever these big dogs discuss may have huge impacts on the markets so it’s best to stay in the loop!
Boom, baby! After GBP/USD’s choppy movement on Wednesday, the pair suddenly burst with life yesterday. It closed the session at 1.6347, almost 100 pips higher from its opening price.
There were two main reasons behind the pound’s climb. First, the Nationwide consumer confidence came out with a very positive result. It printed a reading of 44, significantly higher than the 40 the market initially expected. The pound also benefited from the market’s skepticism that the U.S. could handle its huge budget deficit given the extreme differences in opinions in the government.
No data coming out today from U.K., but do keep a close eye on Chinese data coming out at 2:00 am GMT. If the Chinese gross domestic product (expected to show a 9.5% growth) and the consumer price index (predicted to print a 5.2% rise) come out better than forecast, we could see risk appetite pop up again and help the pound rise!
Just like Cee Lo Green who threw a fit at Coachella, pound bulls also didn’t seem in the mood to hustle in Friday’s trading. GBP/USD traded lower and ended the day 51 pips lower at 1.6296. Meanwhile, GBP/JPY closed the week at 135.41, 100 pips lower from where it opened on Friday.
Perhaps the lack of economic data upset the bulls. If that is the reason, this week is sure going to be interesting with a handful of high-caliber reports on tap.
We started off the week with Rightmove’s HPI report for April which was released earlier today. It showed that house prices increased by 1.7% and more than doubled the 0.8% uptick we saw for March.
Next on our lineup is the minutes of the most recent MPC meeting on Wednesday at 8:30 am GMT. It is expected that three members voted for a rate hike increase. If you’re planning to root for the pound, you may want to keep your fingers crossed that resident hawk Andrew Sentance was able to convince more of his chaps to ask for an interest rate increase in order to tame inflation.
Then on Thursday, we’ll get dibs on consumer spending with the retail sales report on tap at 8:30 am GMT. It has been predicted to show a softer decline of 0.5% for March after falling by 0.8% in February. To be released along that will be the data on public net sector borrowing. Take note that the forecast is for a budget surplus of 19.0 billion GBP for March.
Other than economic reports, make sure you also get a feel of market sentiment. Keep in mind that the pound usually rallies in times of risk appetite.
Bow chicka wow wow! Unlike my boy Mike Posner’s hit single, the pound wasn’t a winner on the charts yesterday! After hitting an intraday low at 1.6167, GBP/USD managed to close at 1.6264, marking a 44 pip loss.
With the slight wave of risk aversion hitting the markets, the pound was just one of the victims to get swept away. Still, its losses weren’t as severe as other currencies like the euro. This could be attributed to the decent results of the Rightmove HPI report, which printed a 1.7% increase in the asking prices of homes, up from the 0.8% figure released last month. The increase is indicative of a healthier housing market, which may have given the pound some support.
Looking at the awesome BabyPips.com economic calendar, we’ve got nothing on tap today. Still, that doesn’t mean you can chill out n listen to your Beatles tunes all day. Watch out for any more news regarding the euro zone and sovereign debt problems. If these concerns escalate, it could spark a whole new round of risk aversion which may just send the pound tumbling down the charts!
Despite the lack of economic data, the Sterling sparkled like Big Pippin’s bling-bling as it rallied past the 1.6300 handle against the dollar in yesterday’s trading. Ooh la la! With the BOE minutes on tap today, will it finally break resistance at 1.6400?
If you recall, BOE Governor Mervyn King didn’t announce a rate hike in the bank’s most recent interest rate decision. Almost everyone had expected it so it wasn’t really a market-moving event for the pound. Now analysts are looking to sink their teeth into the details of the decision to get hints on which direction the U.K.'s monetary policy is headed.
In March, we saw that three members of the MPC voted to start tightening but there were nine who opposed a rate hike. On one side, the more hawkish members point to strong inflationary pressures as the reason for their vote. Meanwhile, the dovish ones think that demand is still too fragile to sustain an increase in borrowing costs.
Economic gurus think that if no one shifted camps or if one of the hawks turned into a dove, the pound will probably get sold off. Meanwhile, if someone from the dovish crew voted to hike rates, we may just see Cable go beyond 1.6400! So make sure you don’t miss the release later at 8:30 am GMT!
No grounding by the MPC was gonna stop the pound from joining the risk appetite party! Despite dovish comments from the MPC, cable was able to come out ahead, imposing its might on the dollar and yen. GBP/USD closed at 1.6402 after opening at 1.6311, while GBP/JPY finished at 135.11, good for a 51 pip gain.
Once again, our buddies over at the MPC did not show much concern about inflation, as they (the majority of them at least) stuck to the wait-and-see stance. According to the minutes, the MPC believes that there is still some weakness in the economy and that it would be best to stick with its currency monetary policy in the mean time.
The pound dropped following the release of the minutes… but risk appetite soon propped it back up! With GBP/USD now sitting at key resistance around the 1.6400 handle, what will it take for the pair to break through the key resistance?
Well, if you’re waiting for a catalyst, then you’re in luck, as we’ve got some high impact reports on deck today! At 8:30 am, both the monthly retail sales and public sector net borrowing reports are due.
Retail sales are projected to come in at -0.5%, a smaller decrease than the previous month’s -0.8% decline. Meanwhile, net borrowings are seen to have increased by another 20 billion GBP, up from 11 billion in March.
I’d pay a lot more attention to the retail sales report, as it is indicative of consumer spending in the U.K. If today’s report comes in way worse than projected, we may see GBP/USD fail to break above key resistance and fall all the way back to this week’s lows!