Bulls played runaway bride with the pound yesterday and left it hanging in the charts just like Hugh Hefner. GBP/USD closed a whopping 197 pips below its opening price at 1.6175. Meanwhile, GBP/JPY parked at 131.10 after opening at 131.73.
The pound fell victim to market sentiment as Europe’s debt woes sparked risk aversion and sent higher-yielding currencies lower. On top of that, the worse-than-expected jobs report from the U.K. might have also given bulls one more reason to ditch the pound.
It was reported that the number of people who filed for unemployment benefits increased by 19,600 in May, while analysts had only anticipated the report to print 7,100 following the 16,900 reading for April.
We also saw the average earnings report for April post a measly 1.8% uptick in job growth that fell short of the market’s 2.1% consensus. Yikes!
On a slightly-brighter note, the unemployment rate remained steady at 7.7% which was what the market was hoping for.
Today, we’ll have the much-anticipated retail sales report on tap. Market junkies credit the 1.1% surge in consumer spending in April to the Royal Wedding so now, most of them are expecting to see that sales returned to normal levels in May. The headline retail sales figure is anticipated to come in at -0.5%.
Make sure you don’t miss the report later! If it comes in better than expected, we may just see GBP/USD bounce back to 1.6400. If it doesn’t, the pair could tumble all the way down to 1.6000!
Still no buyers for the pound! For the third day in a row, markets had no interest in buying the pound as U.K. retail sales came in worse than expected. GBP/USD ended at a new two-week low of 1.6147, 29 pips down for the day.
Analysts had said that retail sales would drop 0.5% in May. After all, it would’ve been hard to match April’s fluke 1.1% surge. So basically, a softer figure was expected for May… but not one THIS soft! It came in 1.4% below the previous month’s!
Digging in to the report, we see that food stores sales had a big hand in bogging down May’s sales. It fell 3.2% month-on-month, the [B]largest drop ever recorded[/B]! It was also noted that consumers were stingy with their money because of the deteriorating economy and job market.
For today, I suggest y’all keep risk sentiment in check. Lately, risk appetite has been down, and with nothing big scheduled to happen today, I don’t see a reason for this to change. That being said, the pound will probably continue to have difficulty finding buyers today, but there’s also a chance it’ll stage a mini rally since it sold off so sharply in the past couple of days.
Just like my boy Ryan Reynold’s Green Lantern, the pound got hammered across the board last Friday when the lack of economic reports from the U.K. did nothing to cancel out the bad vibes from weak economic data early in the week. GBP/USD dropped 40 pips from its intraday high to 1.6154, while GBP/JPY also dropped by 75 pips to 129.48.
Will we see another round of bloodbath for the pound this week? The Rightmove house price index already started the week on the right foot with only a 0.6% gain in June from a 1.3% rise in May.
For the rest of the week we’ll hear from the MPC members as Posen, Fisher, and the big man of the BOE, Governor Mervyn King himself make their speeches throughout the week.
If that’s not enough to satisfy you, you might want to wait for the MPC meeting minutes coming out this Wednesday at 8:30 am GMT. Since the MPC kept its interest rates and asset purchases intact in its last meeting, many analysts are predicting that the BOE is in no hurry to hike its rates.
If you’re one of them news traders though, you might want to watch out for the public sector borrowing report tomorrow at 8:30 am GMT, as well as the CBI industrialized order expectations released two hours after at 10:00 am GMT.
Last to come out from the U.K. this week is the BBA mortgage approvals this Thursday at 8:30 am GMT and the CBI realized sales at 10:00 am GMT. Though many market geeks are already pricing in soft figures for these reports, we can still see upside surprises so make sure you place your stops wisely, aight?
Thanks to the news that a resolution to the Greek debt debacle was underway, risk appetite was able to make its way back into the markets yesterday and provide some support for GBP/USD. The pair, it had opened the Asian trading session at 1.6164, rose a good 37 pips to close the day higher at 1.6201.
The proposed solution was simple. Greece will get an additional 12 billion EUR in funding by the middle of June to avoid a default, but for Greece to be eligible for the funds, the government must also pass on even stricter austerity measures.
Today, the important event to watch out for is the release of the Public Net Borrowing report at 8:30 am GMT. The market expects a 16.1 billion GBP deficit, more than double the 7.7 billion GBP deficit seen the month before. This could be interpreted as negative by the market, as it meant that the public sector spent significantly more than it earned.
Also keep an eye for the distributive trades survey at 10:00 am GMT. The survey is predicted to print a reading of -5, slightly worse than the -2 reading seen in May.
What weak report? The pound bulls shrugged off weak economic data from the U.K. yesterday and continued to push the pound higher against the Greenback. GBP/USD tipped an intraday high of 1.6254 before it capped the day with a 45-pip win at 1.6246.
Though the U.K.’s public sector borrowing almost doubled to 15.2 billion GBP from its 7.7 billion GBP figure in April, the number is still a bit lower than the 16.1 billion GBP that analysts were expecting. Meanwhile, the CPI industrial order expectations clocked in at an index figure of 1 in June, which is better than May’s -2 reading.
Of course, the pound also got a lift from the broad dollar weakness seen yesterday. But with the MPC meeting minutes coming out today at 8:30 am GMT, will the pound continue its momentum up the charts?
Only the MPC minutes will take the spotlight today, so make sure you keep your eyes glued to the tube on this one. Word on the street is that the MPC coven will be more dovish with the hawkish Sentence out of the picture, so keep an eye out on your pound trades today!
Double whammy for the pound! Dovish BOE monetary policy meeting minutes combined with a relatively upbeat statement from the Federal Reserve pushed GBP/USD to a low of 1.6060 yesterday. GBP/JPY wasn’t spared as it fell almost 120 pips from its 130.24 open price.
Just when GBP/USD seemed poised to break above the 1.6250 minor psychological level, the minutes of the latest BOE monetary policy meeting were released. The dovish tone of the minutes forced GBP/USD to take a trip down south, all the way to the 1.6100 area. Apparently, the central bank was already missing the hawkish arguments of Andrew Sentance as only 2 out of 9 policymakers voted against keeping rates on hold. BOE officials also expressed their concern about their country’s weakening economic recovery. In fact, some officials remarked that further asset purchases might be necessary if their economy continues to slump.
Further easing measures?! No wonder pound pairs plummeted!
With hardly any reports due today, the same bearish sentiment could keep dragging the pound down. Only the CBI realized sales data is due, and this could show that the reading dropped from 18 to 11 this month. Worse than expected figures could confirm the downbeat outlook for the British economy, which could be even more negative for the pound. Keep an eye out for this report due 8:30 am GMT.
Later on, monetary policy committee member Adam Posen is set to talk about European economic governance in Berlin at 4:00 pm GMT. Now this guy has been notorious for being extremely dovish so if he continues to downplay the U.K. economic recovery and insists that more asset purchases are needed, we might just see GBP/USD break 1.6000. Stay on your toes, folks!
It’s strike two for the pound! For the second day in a row, disappointing economic reports from the U.K. failed to support the pound in the charts. GBP/USD fell by another 57 pips to 1.6012, while GBP/JPY also inched 5 pips lower at 129.00 after dropping to an intraday low of 128.47.
Yesterday we saw the CBI realized sales report fall to a -2 reading in June from a reading of 18 in May. And to think that analysts were only expecting the data to fall to 13! What’s more, the biggest drops came from clothing and groceries, which are basic necessities. But with the U.K. still struggling with rising prices and weak economic growth, it’s no wonder more and more consumers are tightening their belts on discretionary spending.
Good thing the BBA mortgage approvals report didn’t add to the bad vibes yesterday. The data printed at 30,500 in May, which is slightly better than its 29,700 figure in April. Okay, maybe there were more holidays in Britain last April, but the positive figure was still welcome to a few pound bulls.
We won’t be seeing any economic reports from the U.K. today, but BOE Governor Mervyn King will take center stage in London at 9:30 am GMT where he will talk about the financial stability report. Will he say anything that could be bullish for the pound? Keep close tabs on this one!
Try as it might to keep its head above the 1.6000 handle, GBP/USD had no choice but to close at 1.5970 because the pound was just too heavy last Friday. Guppy had its share of losses too as it closed 50 pips below its 129.00 open price. How low can the pound pairs go?
The U.K. didn’t release any economic data on Friday, but the weight of the most recent BOE statement continued to drag the pound down. Recall that some policymakers suggested that further easing measures could be necessary to speed up the economic recovery in the U.K.
In his speech last Friday, BOE Governor Mervyn King also expressed his concern about their exposure to Greek debt. If you’ve been reading my euro zone economic commentary as well as Forex Gump’s articles on the Greek debt situation, you’d know that euro zone officials are still scrambling to find a solution for Greece’s debt. According to King, this is another reason why the central bank is considering additional stimulus.
The U.K. won’t be releasing any economic data today so I suggest you keep tabs on market sentiment and any developments in the Greek debt drama. Good luck trading!
As much as it thrilled pound bulls to finally see the British currency end its three-day losing streak against the yen and dollar, they must have been even more delighted to see that it did this in spite of Posen’s dovish words. Even with no data backing its rise, GBP/USD was able to rise 15 pips while GBP/JPY posted a more impressive climb of 102 pips.
Strangely enough, the pound was able to do all this amid Adam Posen’s dovish remarks. Posen, who’s arguably the most dovish among the BOE members, argued that it’s downright crazy to call for rate hikes at this point in time, especially in the U.K. where inflation expectations aren’t even on the rise.
He also cited slow credit growth and general economic weakness as reasons why the BOE should continue sitting on its hands.
Those are heavy words to think about ahead of the release of U.K. current account and GDP reports later at 8:30 am GMT. The current account is anticipated to have improved from a deficit of 10.5 billion GBP to 5.0 billion GBP during Q1 2011 and could give the pound a nice boost. On the other hand, GDP growth is expected to remain stable at 0.5%.
Of course, keep in mind that any deviations from forecasts could result in big rallies or drops, so if you’re looking to trade the news today, y’all should definitely tune in!
Make that two in a row! The pound ended another day higher than the Greenback as GBP/USD closed 14 pips up from its 1.5980 open price. Guppy also bagged a win as it closed 25 pips below the 130.00 major psychological level. Are these signs of a reversal or are they mere retracements?
Even though the U.K.'s current account balance fell short of expectations yesterday, the British currency was still able to score some gains. The current account deficit landed at 9.4 billion GBP for the first quarter of 2011, almost twice as much as the predicted 5 billion GBP shortfall. Aside from that, the figure for the previous quarter was revised downwards to show a 13 billion GBP deficit.
During their inflation report hearings, BOE officials expressed their concerns about the sluggish pace of economic recovery in the U.K. Policymaker Adam Posen once again insisted that additional easing is necessary as GDP growth remained at a meager 0.5% for the first quarter. However, BOE Governor Mervyn King maintained that the BOE’s current monetary policy stance is still appropriate.
Brace yourselves for a set of medium-impact reports from the U.K. today. Starting 8:30 am GMT, the U.K. will release its net lending to individuals, index of services, M4 money supply, and mortgage approvals data. These figures will probably have minimal effect on the pound’s movement but, if the actual results come in much worse than expected, the pound might be forced to return its recent gains.
Also stay tuned for the release of the GfK consumer confidence reading at 11:00 pm GMT. This could show that consumers turned more pessimistic in June as the reading is expected to drop from -21 to -23.
My bad… I meant make that [B]three in a row[/B]! For the third straight time, the pound surged against its American counterpart as buyers ignored the mixed feedback on the U.K. economy. GBP/USD posted its largest rise in two weeks, climbing 67 pips in yesterday’s trading.
Yesterday, we learned that net lending to individuals rose by 1.3 billion GBP in May, which is slightly above the consensus forecast of 1.2 billion GBP. Also, mortgage approvals came in line with expectations as it increased from 45,000 to 46,000 last month.
The news then turned a bit sour as the GfK consumer confidence index slid further down from -21 to -25. Apparently, analysts overestimated consumer confidence, which explains why June’s results came in below the -23 forecast. However, some say that such a drop should’ve been expected since the U.K. had just come off a high point, what with the series of public holidays and the Royal Wedding giving Britons reasons to smile over the past two months.
In any case, these reports didn’t seem to have too much of an impact on the markets as risk appetite drove the pound higher. The Greek Parliament’s decision to pass its austerity package restored a bit of confidence in all markets, which explains why almost every pair rallied yesterday.
Today, we have more U.K. data to work with as the Nationwide HPI is anticipated to show a 0.1% increase after the previous month posted a 0.3% uptick. To catch the actual results, you’ll have to tune in at 6:00 am GMT. Keep in mind that this report will be released prior to the London session open, so the market’s true reaction may be a bit delayed.
Then at 8:30 am GMT, the BOE will release its credit conditions survey, which should give us a clearer picture of the U.K.'s lending market. The report could provide further support for the pound if it shows that consumers and businesses have grown more confident in borrowing money.
Can you say comeback kid?! After dropping more than 120 pips early in the London session, GBP/USD recovered in the New York session, and eventually closed at 1.6049, marking just a 12 pip loss on the day.
The pound took a beating during the European session, as bad news kept propping up on the radio. First, the GFK consumer sentiment report printed at -25, slightly worse than the anticipated -23 figure. This highlighted deteriorating consumer confidence, at a time when the U.K. needs spending to pick up.
Next, the Nationwide housing price index also disappointed, as it showed that housing price growth was flat during the month of June. This missed the target of a 0.1% increase, and was a step backwards from the 0.3% growth we saw in May.
Government employees also hit streets and went on strike as they protested the government’s decision to cut back on pensions. Remember, the U.K. government is implementing a strict austerity package and it’s proposals like this that make such measures unpopular. But hey, you gotta do what you gotta do to bring down those fiscal deficits!
Unsurprisingly, this sent the pound floundering and it dove down the charts. However, the pound bull came roaring back, as risk appetite boosted higher yielding currencies. By the end of the day, it was as if the pound barely dropped from its opening price! What a crazy market we live in!
Looking ahead, we’ve got manufacturing PMI data on deck at 8:30 am GMT. The index is projected to print at 52.2, just 0.1 points higher than the last release in June. Take note that over the past few months, the index has been printing weaker numbers. It’s possible that we could see the same today, which may cause a pound sell off.
The pound bobbed its head to the beat of risk sentiment last Friday, as it edged higher against the dollar and yen. Cable managed to close 22 pips higher at 1.6071, while Guppy erased most of its losses from the day before to finish at 129.87, up 67 pips on the day.
If you’re wondering why the pound rose, it had nothing to do with the manufacturing PMI report. The report printed at 51.3, after it was expected to come out at 52.2. Still, the markets didn’t pay much attention as they continued to buy up the pound!
Currently, risk appetite is up, and this mostly has to do with the market reacting positively to the passing of new Greek austerity measures. Risk sentiment is definitely up right now, so don’t be surprised to see the pound erase some of its losses over the past few weeks.
Later today at 8:30 am GMT, the construction PMI is scheduled for release. The index is projected to come in at 53.6, just off last month’s score of 54.0. Now, even though the U.S. is off on holiday, the report will be released early in the London session, so it could prove to be a market catalyst.
The big report to watch out for later this week is the BOE interest rate decision. The central bank isn’t expected to raise rates or make any changes to its asset purchase program, but it’ll be interesting to hear the rhetoric from the accompanying statement. BOE officials, for the most part, have been mostly dovish when talking about interest rates.
Considering that the ECB is widely expected to raise rates this week, more dovish comments from BOE Governor Mervyn King could lead to losses for the pound, more specifically against the euro.
With the Americans off chugging their beers and launching firecrackers, we didn’t see much movement on Cable. The pair traded within a relatively tight range of 90 pips and failed to make any significant new highs or lows. GBP/USD eventually closed just 19 pips higher to finish at 1.6082.
The only notable report released yesterday was the construction PMI, which came right in line with expectations at 53.6. Naturally, this didn’t spark any strong move in the markets and we were treated with a round of low volatility.
The action should pick up today as U.S. traders return from the holiday weekend. But first, we’ve got the services PMI coming out at 8:30 am GMT. Expectations are that the index will come in at 53.6. Take note that the last two reports failed to hit their targets, so if we see the same today, we could see some pound selling take place.
After positive data fueled the pound to its intraday high at 1.6129, bears locked in on GBP/USD like a missile and blasted it down to close the day 17 pips lower from its opening price at 1.6065.
Too bad for ‘em pound bulls, the good vibes that might have come from the positive Services PMI report for June wasn’t enough to offset risk aversion. The index printed at 53.9 and showed an increase from May’s reading of 53.8. I know that’s not a lot, but the actual figure was able to beat the forecast which was a slowdown to 53.6.
We also saw the BRC Shop Price Index for June tick higher at 2.9% than its 2.3% reading in May.
But wait! Don’t get excited about these sexy figures yet. Remember that we’ll have the BOE interest rate decision tomorrow and I don’t think that these positive reports is enough to convince them to hike rates.
Nonetheless, that shouldn’t be an excuse for you to miss the Halifax house price index which is due at 7:00 am GMT. Analysts are expecting the figure for June to match the 0.1% uptick we saw in May. Be on your toes!
Mixed day for the pound, which weakened against safe haven currencies like the dollar and yen but managed to gain versus the euro. With the Bank of England set to release its interest rate decision later tonight, what’s in store for the pound today?
With stocks falling and concerns about Greece and Portugal still plaguing the market, it was clear that risk aversion was the key driver of yesterday’s price action. The only bit of good news that we got was the Halifax housing price index, which revealed a 1.2% increase in housing prices for the month of June. It was expected to show just a 0.1% rise. However, this failed to give the pound bulls any buying momentum and we saw the bears paint the town red during the London and New York sessions.
At 8:30 am GMT, manufacturing production data will be made available. Word is that production rose by a solid 1.1% in May. Take note that the recent trend has shown production to be sliding, so if we do see a positive figure today, it could give the pound a nice boost.
Later on at 11:00 am GMT, the BOE will be releasing its interest rate decision. Considering the mixed data we’ve been receiving from the U.K. as of late, many do not expect much from today’s rate statement and interest rates are expected to remain unchanged. In any case, watch out for any statements made by central bank members, as a slip of the tongue here or there could spark big moves in pound pairs.
Looks like sentiment towards the pound was a little too heavy, as the GBP pairs failed to benefit from the run of risk appetite yesterday. GBP/USD dropped for the third consecutive day, closing 31 pips lower to finish at 1.5967.
As expected, our buddies over at the Bank of England kept rates steady at 0.50%, which is probably what kept the pound from rising. Take note that if there are no changes in rates or the asset purchase program, the BOE does not release an accompanying statement. This meant that Mervyn King and his merry men went off for an early tea break yesterday, and now, we’re gonna have to wait a bit for the minutes of the meeting before we can see which way the monetary policy committee is leaning towards.
In other news, manufacturing production did pick up in May, rising 1.8%. This was a pleasant surprise as not only was it way better than the forecasted 1.1% growth, but it was also a major improvement from the revised 1.6% decline in April.
Still, according to the National Institute of Economic and Social Research (NIESR), the U.K. economy is projected to have slowed down to a snail’s pace during the 2nd quarter, with the GDP growth estimated at just 0.1%. If this is indeed the case, then we may just see the BOE maintain current monetary policy for the time being.
For today, producer price input figures will be coming in at 8:30 am GMT. Producers are expected to have paid 0.1% more for their raw materials. Be aware that this report is a leading indicator of inflation, as companies normally pass any additional production costs to consumers. If this report comes in much higher than expected, we could see the pound find some support.
Aha! It looks like it’s not just the Royal Couple flyin’ high in the skies. The pound also soared up the charts in Friday, bouncing from its intraday low of 1.5931 against the dollar to end the week at 1.6046 with a 115-pip gain for the day.
Cable surged following the disappointing NFP report from the U.S. Aside from the dollar weakness though, I think the better-than-expectedPPI report for June also boosted the pound.
It was reported than producer input prices were up 0.4% during the month and topped the market’s 0.1% forecast. Meanwhile, output prices came in as expected at 0.1%.
Although producer prices don’t have a significant relationship with interest rate expectations, the figures show that inflation pressures remain high in the U.K. Who knows, maybe the rise in producer prices would translate to a surge in consumer prices.
For today, we have the BRC retail sales monitor report at 11:00 pm GMT. A figure better than May’s -2.1% reading would probably be bullish for the pound so watch out! Along with that, the RICS housing survey for the same month will also be released and it is eyed to come in at -24%.
The pound began the week on a disappointing note yesterday as risk aversion managed to make its way back into the foreign exchange markets. Once again, the culprit was none other than the euro zone debt debacle. GBP/USD, after it had opened the day at 1.6031, found itself 131 pips lower by the end of the U.S. trading session.
It appears that the market is afraid that debt problems could spread to the weaker members of the euro zone. Italy, a country that has been exhibiting sluggish growth and a high level of doubt, is one of the euro zone nations that investors are focused on.
There weren’t any important data that were released from U.K. yesterday, but today will be different! Later, at 8:30 am GMT, we will see U.K.’s consumer price index and trade balance.
The consumer price index is expected to show that inflation remained steady at 4.5%. Meanwhile, the core version of the report which includes the prices of volatile items such as food, gas, and alcohol, is predicted to print a 3.4% increase.
The trade balance, on the other hand, is anticipated to show a deficit of 7.3 billion GBP, slightly lower than the 7.4 billion GBP deficit seen the month before.
With the market focused on risk aversion, worse-than-expected results could lead to another pound sell-off. Watch out folks!
The pound’s price action was as mixed as Happy Pip’s cd collection as the currency bulls and bears played tug-o-war with the pound. GBP/USD capped the day 16 pips above its open price at 1.5916, while GBP/JPY recovered to only a 133-pip loss after dropping to an intraday low of 125.14.
Does this mean that the pound bears are losing steam? Well, not really. After all, there’s still plenty of economic data to keep the bulls on their toes.
For one, the U.K.’s CPI report unexpectedly fell by 0.1% in June, a first since 2003. What’s more, it pulled the inflation rate back to 4.2% from 4.5% and probably gave the MPC doves more reason NOT to hike its interest rates.
Looking at other news we also saw that the change in the selling price of homes in the U.K. fell by another 1.6% in May from its 0.3% decline in April, while the country’s trade deficit widened to 8.5 billion GBP in May from its 7.6 billion GBP figure in April. Yeouch!
Will the U.K. have more bad news for the markets today? If the euro zone woes doesn’t hog the spotlight too much today, then pound traders will be able to focus on the employment figures coming up at 8:30 am GMT. The U.K. jobless claims report is expected to come in at 15,000 in June, a bit better than its 19,600 reading in May.
Good luck in your trades today, kids!