Save for a minor spike at the wake of the London session, GBP/USD price action in Friday’s trading was as calm as the clear, blue Easter sky. The pair tapped an intraday high of 1.6570 before ending the day 12 pips lower from its opening price at 1.6516.
The muted price action that we saw on Friday was probably due to the absence of economic reports from the U.K. So, with the Britons still enjoying their extended weekend, I have a feeling we may be in for another snoozer on the charts today. Boo!
Don’t fret! Our economic calendar indicates that tomorrow we’ll have a couple of events on tap for the pound. The first one, scheduled at 10:00 am GMT, is the CBI Industrial Trends Index. Analysts are expecting to see that optimism waned down a bit with the forecast lower at 4.0 than last month’s 5.0 reading.
Then at 2:00 pm GMT, BOE MPC member Andrew Sentance will give a speech in Manchester. He’s known as the most hawkish member of the MPC clique, so I wouldn’t be surprised if he talks about the need to raise rates. But keep an ear out for what he has to say. Who knows, he may have something up his sleeve that could send the pound on a rally!
Even if most banks were closed for the holidays, Cable was still able to display some nice movement in yesterday’s trading session. Cable bounced around aggressively within an 80-pip range, finding resistance at 1.6550 and support at 1.6470. At the end of the U.S. trading session, Cable closed at 1.6494, 37 pips lower from its opening price.
Today, the only important piece of data from U.K. to watch out for is the CBI industrial trends survey. Scheduled to be published at 10:00 am GMT, the CBI industrial trends survey is predicted to fall to 4 after printing 5 the previous month. This means that while order volume will probably increase, the rate of increase is slowing down.
Also, expect liquidity to come back in full force today as traders return to their trading stations after the long Easter holiday. Whether this will lead to choppy Cable movement or a one-directional trend move is still uncertain, so keep a close eye on price action!
Whoa! Did pound bulls ditch the charts to get ready for the Royal Wedding? GBP/USD seesawed between resistance at 1.6500 and support at 1.6450 in yesterday’s trading before closing at 1.6475. With a 25-pip loss, the pound was the only major currency that lost to the dollar. Boo!
According to economic gurus, the worse-than-expected report from the Confederation of Industrial Order Expectations might have caused the pound its third straight loss against the Greenback. The CBI Industrial Order Expectations index for April came in lower at -11 after printing at 5 in March. On top of that, it also disappointed expectations as traders only braced for a modest decrease to 4.
Digging a little deeper into the report, I found out that the decline in exports and output volume took the biggest toll on the index. However, a few giddy analysts say that there’s no cause for alarm. They point out that the index printed at its 3-year high last month and perhaps what we’re seeing is nothing more than just a pullback.
Today we have the preliminary reading of 2011 Q1 GDP. The consensus is for a 0.5% uptick in growth to erase the decline we saw in the last quarter of 2010. If you’re planning to trade the report later at 8:30 am GMT, remember to be careful okay? Check out Forex Gump’s blog yesterday to help you brace yourself.
The BBA Mortgage Approvals report for March is also scheduled to be released along with the GDP report. Take note that the forecast is at 30,600 and a better-than-expected figure may be bullish for the currency.
It’s all about the positives, baby! The pound was able to rally strongly against the dollar yesterday, thanks to the GDP report showing growth. GBP/USD, which started the day at 1.6475, closed the U.S. trading session a whopping 160 pips higher at 1.6635.
The preliminary GDP showed that U.K.’s economy managed to avoid a technical recession (two consecutive quarters of negative growth) and actually expand 0.5% during the first quarter of 2011. According to the report, the primary source of growth was the service sector, as output rose 0.9%, the strongest in almost 5 years.
The BBA mortgage approvals also provided support for Cable. It came out with a 31,700 figure, slightly higher than the 30,600 forecast.
Compared to yesterday, U.K.’s economic calendar today is light. Even though this is the case, we will still probably see a lot of volatility since it is the U.S.’s turn to release their GDP report. If the U.S. GDP report fails to meet expectations, we could see traders favor the pound again!
Cable’s price action yesterday was as sharp as a needle. Cable started the day very strong and rallied as high as high as 1.6747, but it made a hard U-turn and gave up all of its gains to end the day at 1.6638. All in all, Cable only gained 3 pips. If you look at the daily chart of Cable, you’ll see a very pointed pin-like candlestick!
The initial surge in Cable’s value was apparently due to the left over positive vibes from the GDP report. Recall that the GDP report showed that U.K. was able to miss a technical recession and actually expanded by 0.5% during the first quarter. Unfortunately, there weren’t any data or catalyst to keep the Cable going, so it eventually fell during the European trading session.
Today will be a light day for Cable as U.K. banks go on holiday in observance of the Royal Wedding, so Cable will probably be driven by data coming out of other major economies.
Okay, that’s it for this week! Go catch ‘em pips!
“Success,” exclaimed the bulls last Friday as they took the pound back above the 1.6700 level versus the dollar last Friday. The bullish sentiment towards the pound seemed to be mainly due to the increasing interest rate hike expectation from the BOE now that the country was able to avoid a double-dip recession and actually grow 0.5% during the first quarter of this year.
This week, we’ll be treated to a plethora of economic events starting with Bank of England Governor [Mervyn King](http://www.babypips.com/forexpedia/Mervyn_King)’s speech at 1:00 pm GMT later today. King will be speaking in front of the European Parliament to discuss inflation and U.K.’s economic outlook.
On Tuesday, the Manufacturing PMI will be published. The survey, which will come out at 8:30 am GMT, is forecast to have remained at 57.1.
On Wednesday, there are two market moving reports.
The first one is the Nationwide HPI. The Nationwide HPI measures the average monthly change in selling price of homes backed by Nationwide. It is scheduled to print at 6:00 am GMT and is expected to show a small 0.3% gain. The second one is the Construction PMI. The construction PMI will publish at 8:30 am GMT and is predicted to fall to 55.6 from the previous month’s 56.4.
Finally, on Thursday, the [Bank of England (BOE)](http://www.babypips.com/forexpedia/BOE) will announce their decision on interest rates at 11:00 am GMT. The market anticipates that the central bank will keep rates unchanged at 0.50% and NOT engage in any quantitative easing measures. With [U.K.](http://www.babypips.com/school/united_kingdom.html)’s inflation rate way above the BOE’s target, it’d be best to keep your guard up for a possible surprise rate hike.
As you can see, we’ve got a lot of hard-hitting economic reports on the forex calendar. If I were you, I’d hit the charts and take advantage of all the volatility the market has to offer! Good luck trading folks.
Too bad the Royal Wedding high didn’t last long! While my mates over in the U.K. were celebrating their May day holiday, the pound bears were hard at work. As a result, GBP/JPY fell by 42 pips to 135.30. The pound lost to the Greenbackthough, when Osama’s death gave the dollar support, and dragged GBP/USD 59 pips lower to 1.6656.
No economic reports were released from the U.K. yesterday, but you can bet that my English buds are getting back in action today when the U.K. manufacturing PMI is released at 8:30 am GMT, followed by the CBI realized sales at 10:00 am GMT. Both data are expected to show a slight dip for the month of April, watch out for any surprises!
The pound took a beating yesterday after weak U.K. economic data, combined with risk aversion, erased GBP/USD’s recent gains. The pair fell from a high of 1.6656 to a low of 1.6464 before closing at 1.6470. GBP/JPY plummeted by almost 200 pips from its open price of 135.31 and ended the day at 133.33.
U.K.'s disappointing manufacturing PMI was mostly the reason for the pound’s decline. The index for April was projected to land at 57.0 but fell to 54.6 instead. On top of that, the previous month’s figure was downwardly revised from 57.1 to 56.7, indicating that the expansion in the U.K.'s manufacturing industry wasn’t as strong as initially reported. A closer look at the components of the report reveals that the slump was partly caused by the pound’s recent rallies, which dampened demand for British products.
Today, the U.K. is set to release its Nationwide HPI and construction PMI. The house price index could post a 0.3% uptick for April, slightly weaker than the 0.5% rise seen in March. Meanwhile, the construction PMI is expected to dip from 56.4 to 55.6 in April. If the actual figures come in worse than expected, the pound could chalk up another day of losses. On the other hand, if we see better than expected results, the pound might have a chance to recover. Stay tuned for the Nationwide HPI due 6:00 am GMT and the construction PMI set for release on 8:30 am GMT!
Oomph! Yesterday the pound received a one-two punch from markets when it beat down the currency for the second day in a row. GBP/USD might’ve risen to 1.6503 on dollar weakness, but EUR/GBP tapped a 13-month high at .9030 while GBP/JPY dropped to 132.94.
With worse-than-expected economic data popping up left and right in the U.K., it’s no surprise that the currency bears are feasting on the pound. A survey on the country’s construction industry revealed an index figure of only 53.3 in April when markets were expecting a reading of 55.6. For many analysts, the report is uncomfortably close below 50.0, which represents industry contraction.
In other reports, net lending in the country in March also showed a grim picture, printing at only half a billion GBP from February’s 1.7 billion GBP figure. Uh-oh, does this mean that less people are now willing to borrow or worse, qualified to borrow money?
For today all eyes will be on the Monetary Policy Committee as they deliver their interest rate decision at 11:00 am GMT. Market analysts aren’t expecting any fireworks from the team as recent economic data support a dovish stance, but keep your ears tuned for any hints on their reaction to inflation! Meanwhile, if you’re the news trader type of guy, you can also trade the services PMI coming out at 8:30 am GMT, as well as the preliminary mortgage approvals report around the same time.
Oh, that’s gotta hurt! The pound took another beating from the Greenback and the yen yesterday as risk aversion gripped the markets once again. GBP/USD dipped to a low of 1.6359 while GBP/JPY dropped by almost 200 pips from its 132.94 open price.
In terms of economic figures, the U.K.'s losing streak continued yesterday when the services PMI came in weaker than expected. The index was projected to have dropped from 57.1 to 55.8 in April, but the actual decline was far worse as the index fell to 54.3. Although last month’s reading is still above 50.0, which indicates that the industry expanded during the period, pound traders were extremely disappointed to find out that the U.K.'s largest sector didn’t perform as well as it hoped.
Later on, the pound got another dose of bad vibes when the BOE released their monetary policy statement. As expected, the central bank kept rates on hold at 0.5% and their asset purchase facility unchanged at 200 billion GBP, but Pound traders were dismayed when BOE officials acknowledged that the economic recovery is losing steam.
BOE Governor Mervyn King is set to give a speech today and this could shed more light on the central bank’s economic outlook and future monetary policy decisions. This event is scheduled at 9:30 am GMT so expect the British Pound to be a little more jittery then. Prior to that, the U.K. will release its PPI figures for April. Producer input prices are projected to have risen by 1.7% while output prices could show a 0.7% uptick for the month. If these figures also come in worse than expected, pound pairs could suffer more losses today.
The bears might have had control over the pound for most of the week, but the bulls were behind the wheel on Friday! After a bit of sideways trading, the pound was able to end the day higher against its counterparts, putting an end to its losing streak. GBP/USD stayed above its daily opening price for most of the day, but closed just 22 pips higher at 1.6398.
No doubt, the better-than-expected PPI input figure had a hand in propping up the pound last Friday. It posted a 2.6% increase in manufacturers’ input materials, almost a full percentage point above the anticipated 1.7% uptick. As we all know, manufacturers often pass on their rising costs to consumers, which is why the PPI is often seen as a lead indicator of consumer inflation.
For today, we have a couple of tier 2 reports on tap at 11:01 pm GMT. The BRC retail sales report previously showed us a disappointing 3.5% decline, while the RICS house price balance showed a 23% drop of its own. If these reports can show a nice improvement from their previous readings, it could be enough to lift the pound higher and complete its reversal.
Looking further ahead, we have the BOE’s inflation report due at 9:30 am GMT on Wednesday. The inflation report will probably continue to highlight the BOE’s dovishness, as they seem to be growing more and more concerned about the economy’s recovery.
We also have manufacturing production data coming out later in the week. February may have failed to record any growth, but forecasts say March will probably post a respectable 0.3% uptick. Don’t miss the report when it comes out at 8:30 am GMT on Thursday!
Traders showed no mercy for the pound as they pushed the currency lower against its counterparts despite the risk rallies yesterday. GBP/USD dipped to a low of 1.6270 before recovering to close at 1.6394 while GBP/JPY struggled to stay above the 131.50 area.
The U.K.'s Halifax house price index fell short of expectations when it printed a 1.4% decline in house prices for April. This was worse than the flat reading seen last March and the expected 0.2% uptick. The surprise drop was caused by stricter lending conditions and a slowdown in the economic recovery.
There aren’t any reports due from the U.K. today so make sure you read the rest of my daily economic roundup to find out which events could affect risk sentiment today. Good luck trading!
Proving that Monday’s price action was no fluke, pound bears took control over the pound and held it down again yesterday. The pound was one of the few currencies that weakened against the Greenback, as Cable slid 36 pips down to 1.6358.
Pound bulls were never really in the game from the very beginning. Even with positive data being released early in the day, they just couldn’t muster the strength to lift the heavy pound!
The BRC retail sales monitor printed a nice 5.2 % rise (versus March’s 3.5% decline), but even with such a solid reversal, pound bulls just couldn’t find their groove. Details of the report revealed that Britons got their grub on in April as food sales growth was once again in the green. Clothing also contributed a lot to retail sales as consumers ditched their winter-wear for warm weather clothing.
The RICS house price balance report couldn’t seem to urge bulls on either, even though it printed above forecast. Last month’s data earned a reading of -21%, which is a tad bit better than the forecasted -22% and the previous month’s reading of -23%.
Y’all better have your trading hats on, kids, ‘cause we might be in for a bumpy ride today! At 9:30 am GMT, the spotlight shifts back to the U.K.’s favorite topic, inflation, as the BOE releases its inflation report.
Given the way it has talked down inflation and avoided rate hikes in the past, I wouldn’t be surprised to see the BOE continue to downplay inflation and dish out dovish words. But in the event that it raises its inflation forecasts, it could spur a massive pound rally that could erase the pound’s losses from last week’s poor economic data.
As my momma always said, things can always change on a dime… and that’s exactly what happened on Cable yesterday! After zooming higher following the inflation reports, GBP/USD found tough resistance at the 1.6500 before nose diving all the way back down. By the end of the day, the pair closed at 1.6348, 10 pips below its closing price and 170 pips off its highs of the day.
The Bank of England came out more bullish than expected, as they rose their inflation forecasts and hinted that it may just raise rates later this year. According to their estimates, inflation will most likely hit 5% later this year and stay well above their 2% target in 2012.
While the BOE did acknowledge downside risks to the recovery, that’s not what traders were focused on. It’s all about interest rates baby! Just take a look at the euro zone – despite all those sovereign debt concerns, the euro rose earlier this year on rate hike speculation. With the BOE most likely raising rates later this year, it’s no surprise that pound bulls’ hearts jumped up like a teenager girl’s at a Justin Beiber concert.
What was surprising however, was how quickly the pound gave back all its gains. Thanks to mixed Chinese data and disappointing U.S. trade balance figures, we saw a broad risk sell-off take place during the U.S. session. Safe havens like the yen and dollar benefitted, and we saw GBP/USD fall right back to its opening price! Boohoo Mr. Cable!
Looking at today’s economic calendar, we’ve got another set of top tier data coming out.
At 8:30 am GMT, manufacturing production figures are set to be released. Word on the forex grapevine is that production grew by 0.3% in March, after we saw flat growth in February. Take note that the past few months, forecasts have been way off target. If you’re the type who likes playing news events, this may be right up your alley!
Later on, NIESR will be releasing its GDP estimates. Has the U.K economy improved upon the 0.7% month-on-month growth from March? Find out later at 2:00 pm GMT!
Oh man, not again?! The pound ended the day frustrated with suffering another loss against its major counterparts. Cable opened at 1.6348, reached a high of 1.6381, then closed 15 pips below the 1.6300 handle. Meanwhile, guppy plunged from a high of 133.18 to close at 131.70. Will the pound’s losing streak continue today?
Weak economic data from the U.K. pushed the pound down in yesterday’s trading. Their manufacturing production report showed a mere 0.2% uptick, a notch less than the projected 0.3% increase. Industrial production also came short of expectations, with the actual report printing a 0.3% rise instead of the expected 0.9% increase.
The U.K. won’t be releasing any economic data today so make sure you weigh any possible changes in market sentiment first before taking any pound trades. Good luck!
With no Lionel to help it out, the cable stammered down the charts like Bertie on Friday. After testing as high as the 1.6300 handle, it was all downhill for GBP/USD, as it fell all the way down to 1.6192, marking a 93 pip loss for the day.
Clearly, risk aversion was still the main market theme on Friday, with higher yielding currencies (like the pound) losing out to safe havens like the dollar and yen. Just to put things in perspective, GBP/USD had been trading as high as 1.6500 earlier in the week, before closing below the 1.6200 handle. Will we see more b-b-bearish moves this week? Or could we see a rebound higher?
Looking ahead, we’ve got some major market movers that could make or break the pound.
First, CPI data and the BOE inflation letter will be released tomorrow at 8:30 am GMT. Expectations are that year-on-year inflation is still waxing hot at 4.1%, way above the 3.0% target of the BOE. Take note that last week, the BOE was a lot more hawkish when it showed some concern about the state of inflation. If we hear more a more hawkish from the inflation letter, then it could boost the pound.
Other top tier reports to keep an eye on are the MPC meeting minutes and retail sales data that will become available on Wednesday and Thursday respectively. The pound normally reacts to news report, so if you love trading the news, you better mark these two events on your economic calendar!
Bears pulled off ‘The Creep’ on the pound during the New York session yesterday. Sellers stalked the currency from its intraday high at 1.6255 against the dollar and took it down to close the day 7 pips lower from its opening price at 1.6204.
I have a feeling that the negative Rightmove HPI report might have attracted the bears to the pound. It showed that the increase in house prices were slower in May at 1.3% than they were in April at 1.7%.
Hmmm, I wonder how today’s CPI report will affect the pound’s fate on the charts. Due at 8:30 am GMT, inflation to have increased by 4.2% in April and the core reading is eyed to print a 3.4% uptick for the month.
The figures will probably rock the pound’s socks in yesterday’s trading as they would confirm or negate the hawkish tone we heard from the recent Quarterly Inflatiion Report by the BOE. So make sure you don’t miss it! A better-than-expected report will probably be bullish for the pound as this would give Governor Mervyn King and his chaps one more reason to start hiking interest rates.
“It’s getting hot in here… so take off all your….” I’m talking about U.K. inflation data of course! Thanks to strong CPI figures, GBP/USD rose as high as the 1.6300 handle before closing at 1.6244, 40 pips higher on the day.
Whooooo – U.K. inflation is as waxing hot as Natalie Portman in Thor! The CPI report revealed that year-on-year inflation was at 4.5%, way higher than the anticipated 4.2% figure. The core version, which doesn’t include energy and food costs, also beat expectations, coming in at 3.7% as opposed to the predicted 3.4% number.
And how did forex market participants react to the news? They bought the pound of course! Rising inflation gives the BOE more reason to raise interest rates, which is bullish for the pound. While the markets have probably priced in at least one rate hike by the end of the year, if consumer prices continue to spike higher, don’t be surprised if we hear more hawkish tones from central bankers.
Today, we have more red flags going up the totem pole.
At 8:30 am GMT, the latest claimant count change and MPC meeting minutes will be released. Another 4,000 people are expected to hop on the unemployment claim line. This would mark the second consecutive month that claims rose. Meanwhile, I expect that the minutes will reveal that some BOE members are concerned about inflation but that the bank will keep with its current wait-and-see approach.
Watch out though, because it the minutes reveal that more members are hawkish than not, it could send the pound flying up the charts once again!
Boy did traders shed pounds yesterday! Ha! Against the dollar, the pound plunged 183 pips from its intraday high at 1.6289 all the way to 1.6106 where it bottomed. It was only able to pare some of its losses ending of the day at 1.6158.
Worse-than-expected data and not-so-surprising MPC minutes might have weighed down the currency.
It was reported yesterday that the number of people who filed for unemployment benefits in April increased by 12,400. Not only did the claimant count report disappoint the forecast which was for a measly increase of 400, but the figure for April was revised up to 6,400 from 700. Whoooaaa!
On a brighter note, the unemployment rate or March came in lower at 7.7% from its previous 7.8% reading and beat the 7.9% forecast.
Meanwhile, the minutes of the most recent MPC meeting showed that the doves outnumbered the hawks six to three. Digging deeper into the report, I found out that MPC members are concerned that an interest rate hike would weigh down on consumer spending and take a toll on recovery. And so, they just opted for their usual wait-and-see approach.
Speaking of consumer spending, today we’ll have the retail sales report for April on tap at 8:30 am GMT! The consensus is at 0.9%, so watch out for a better-than-expected figure as this could possibly put an end to the pound’s slide.
But I wouldn’t keep my hopes up too much if I were you. According to Nationwide’s Consumer Confidence report for the same month, consumer sentiment waned down. Its index missed the forecast by 5.0 points when it came in at 43.0. Yikes!
Why thank you British consumers! Due to a positive retail sales report, the pound was able to post some gains over other major currencies in yesterday’s trading session. GBP/USD, for instance, closed the U.S. trading session at 1.6232, a respectable 74 pips higher from its day open price.
The U.K. retail sales report showed that consumers ramped up their spending in April by 1.1%, slightly higher than the 0.9% increase initially expected. The April’s figure was also almost 4 times the 0.3% gain seen the previous month. I guess the pound bulls will have to extend their thanks to Prince William and Kate Middleton for boosting consumer activity with their super grand wedding!
Compared to yesterday, the pound’s price action will probably be slower today as there’s absolutely nothing on U.K.’s forex calendar. This means that we could see the pound simply trade within its session highs and lows. Good luck homies!