Different strokes for different folks! While some traders decided to dump the pound in favor of the dollar, others bought it up against the euro. As a result, GBP/USD stayed low and finished 6 pips lower at 1.5517, while EUR/GBP dropped 38 pips to undo Monday’s gains and end at .7779.
The U.K. didn’t really publish anything to shake up the markets yesterday. The markets barely blinked at the BBA mortgage approvals report, even though results failed to match forecasts. June only saw 26,300 approvals, instead of the 31,400 that many had predicted. Meanwhile, May’s record of 30,200 was revised down to just 29,600.
Now, let’s shift our attention to what’s coming up - the quarterly GDP report! As I said on Monday, it’s likely that we’ll see a third straight month of contraction in the U.K. economy as consumer spending, trade, and government spending have all been weak as of late. As a matter of fact, most are expecting a 0.2% decline in growth!
That being the case, the markets may treat the pound bearishly today. But do be on the lookout for an upside surprise, as it could lead to a strong pound rally. Make sure to tune in at 8:30 am GMT to catch the action!
The pound just can’t catch a break can it? Despite a risk rally across the markets, the pound found itself at the loser’s table yesterday, falling 18 pips against the dollar to finish at 1.5499, while EUR/GBP closed at .7843, up 64 pips on the day. What gives?
Unfortunately, GDP figures came in much worse than projected, as they indicated that the U.K. economy shrank by 0.7% last quarter. Not only was this much lower than the anticipated 0.2% decline, but it marked the third consecutive quarter that GDP growth printed in the red.
The question now is how will the Bank of England react? Yes, it already expanded its asset purchase program by 50 billion GBP earlier this month, but we’ve also been hearing rumors that BOE Governor Mervyn King and his buddies are thinking about cutting interest rates as well!
Nothing lined up for today, but as usual, keep an eye out on risk sentiment. Seeing as how other higher yielding currencies rallied yesterday, lets see if the pound bulls can catch up and erase some of yesterday’s losses.
Yowza! It’s not everyday that you see GBP/USD jump by 200 pips! Cable finally broke out of its consolidation around the 1.5500 mark and rallied to the 1.5700 handle before closing at 1.5691. GBP/JPY had its fair share of gains as it climbed from its 121.16 open price to close at 122.71.
At first, I thought that it was all that excitement about the London Olympics that drove the British pound higher against most of its major counterparts yesterday. But, upon closer inspection, I realized that the pound was being lifted by renewed risk appetite due to ECB head Draghi’s pledge to support the euro. This commitment from none other than the euro zone central bank President himself was more than enough to ease fears of a potential euro zone breakup, which was one of the main factors weighing on risk during the past few days.
The U.K. didn’t release any economic reports yesterday and won’t be releasing any today, which means that the pound could keep movin’ and groovin’ to the tune of risk sentiment. Be careful out there!
Two in a row, baby! The pound bulls charged happily last Friday, and no, it’s not because they saw the “Queen” jump from a helicopter in the 2012 Olympics opening ceremony. Cable rose by another 32 pips, while Guppy took a 73-pip hike. Booyah!
No data was released from the U.K. last Friday, but currency traders continued to buy high-yielding currencies like the pound when Merkel, Hollande, and even German Finance Minister Schauble joined forces with Mario Draghi and hinted that they will do everything to support the euro. Talk about teamwork!
And then there were rumors that the ECB’s Securities Markets Programme (SMP) will be combined with the EFSF to bring Spanish and Italian bond yields down. Though details are still being hashed out, the possibility that the ECB will take a more active role in supporting peripheral economies boosted risk appetite in markets.
Will the good vibes last this week? The 2012 Olympics host is in for a parade of economic reports today, starting with the net individual lending and mortgage approvals data at 8:30 am GMT, followed by the CBI realized sales at 10:00 am GMT.
Then, the GfK consumer confidence report is scheduled to come last at 11:01 pm GMT. The reports are expected to come in a bit weaker than their previous figures, but make sure you keep an eye out for any surprises!
Down she goes! The pound traded lower against most of its counterparts yesterday following the release of worse than expected data from the U.K. GBP/USD dipped to an intraday low of 1.5673 before ending the day 17 pips below its opening price at 1.5711. Meanwhile, GBP/JPY finished with a 60-pip loss for the day at 122.84.
There were a few economic reports from the U.K. yesterday. Sadly for the pound bulls, all of them fell short of expectations.
The BOE reported that net lending to individuals only amounted to 300 million GBP in July when analysts were expecting it to be around 800 million GBP for the month. On top of that, the CBI’s report on consumer spending for the current month also came in lower than forecasts. The realized sales index printed at 11 versus the 17 consensus.
Lastly, the GfK consumer confidence index showed a more dire level of optimism among British consumers. The figure for July was at -29 and disappointed the market’s forecast at -28.
Our forex calendar doesn’t list any top-tier data from the U.K today. Hmmm, I guess everyone o’er there is busy watching the Olympics. If you’re looking to trade the pound, make sure you keep tabs on market sentiment as the market’s mood will probably continue to dictate the currency’s price action. Remember that risk appetite is usually good for higher-yielding currencies (including the pound!) while risk aversion usually sends them lower on the charts. Good luck!
Unfortunately, Tuesday turned out to be “one of those days” for Cable. The pair marked its second consecutive day of decline due to the increasing negative economic outlook ahead of the Bank of England (BOE)’s interest rate decision later in the week. Cable closed the day at 1.5679, 32 pips lower from its opening price during the Asian trading session.
No major economic reports were released yesterday but today there are two important events lined up.
First is publication of the Nationwide House Price Index. It measures the average change in the selling prices of houses with mortgages backed by Nationwide. It’s expected to print a 0.1% decline for this month after it had shown a 0.6% decrease in June.
The second one is the Manufacturing Purchasing Managers’ Index. It’s anticipated to print a reading of 48.6, exactly like the reading seen the previous month. Keep a close eye on the result, as the report usually has a significant impact on the pound’s price action.
Blimey! The pound scored its third consecutive loss against the dollar and the yen yesterday. GBP/USD dropped from its opening price of 1.5679 to close at 1.5541. Meanwhile, GBP/JPY finished the day 53 pips below its opening price at 121.96.
What caused the pound’s demise this time around?
I’m willing to bet that the U.K. manufacturing PMI report for July had to do with the currency’s slide. The figure came in at 45.4, translating to the fastest pace of contraction in three years as it follows June’s 48.4 reading. It also disappointed forecasts as analysts had only predicted a more moderate pullback to 48.6.
Of course, it also didn’t help that the Fed didn’t introduce any easing measures and they didn’t sound as dovish as many market participants had anticipated.
Today is sure to be another action-packed day for the pound with our forex calendar listing a couple of top-tier events from the U.K.
We kick things off at 8:30 am GMT with the construction PMI for July. A reading of 48.2 is expected, matching June’s figure.
Then at 11:00 am GMT, the BOE will take center stage for its interest rate decision. Keep in mind that the central bank just increased asset purchases last month. And so, almost everyone is expecting BOE Governor Mervyn King and his crew to sit on the sidelines this time around.
Be on your toes for remarks from the central bankers though. If they sound more dovish about future monetary policy, we could see the pound extend its losses!
The pound found itself backed into a corner yesterday as both the BOE and the ECB interest rate decisions disappointed market participants. By the end of the U.S. trading session, the currency gave up 30 pips to the safe haven dollar and 64 pips to the low-yielding yen.
As widely expected, the Bank of England (BOE) decided to keep the benchmark interest rate at a record low of 0.5% and the asset purchase facility unchanged at 375 billion GBP. According to the central bank, the decision was to support the ailing economy and make sure that it is able to meet its inflation target over the medium term.
There was some good news though. The Construction PMI, which was initially expected to print a reading of 48.2, came in better than expected and was able to go above the 50 level that divides contraction from growth. It showed a reading of 50.2, indicating that the construction industry is poised to expand.
Today, prepare yourself for the Services PMI at 8:30 am GMT. It’s projected to increase to 51.6 from last month’s 51.3. If the actual figure fails to meet forecast, we could see the pound sell off for the third straight day.
Weak economic data? No problem! The pound took a breather from its losses last Friday when it gained 133 pips on the Greenback and 160 pips on the yen. The question is, can the pound bulls sustain the rally?
Aside from an overall improvement in risk appetite, the pound bulls don’t really have much to go on with. After all, the U.K. did print a 19-month low services PMI data last Friday, which is a gloomy enough picture even without the three-year low manufacturing PMI and the sluggish construction growth that we saw a couple of days ago.
So unless the markets are in the mood to trade reports and speeches from the euro zone and the U.S., then you better keep an eye out for the Halifax house price index coming up at 7:00 am GMT, followed by the BRC retail sales data at 11:00 pm GMT.
Word on the hood is that both reports are slated to come in weaker than their previous readings, but make sure you’re ready with your trade plans in case there are any surprises!
Cable began the week on a weak note as a report showed that house prices fell more than expected. GBP/USD started the Asian session at 1.5615, fell as low as 1.5546, and then closed the day near its open price at 1.5605.
The Halifax House Price Index that was released yesterday showed that the average selling price of homes dropped by 0.6%. Analysts only predicted a 0.5% decrease after the previous month’s 0.8% gain.
The U.K. is set to release its Manufacturing Production report at 8:30 am GMT today and this report is predicted to show a 4.0% decline. Given how jittery the market has been yesterday, a worse-than-expected figure could result in another sell-off in the pound. Stay on your toes folks!
Hang in there, brothas! Thanks to better-than-expected U.K. data, the pound was able to score gains against its major counterparts. Cable rose by 27 pips, Guppy inched 87 pips higher, and EUR/GBP fell by 13 pips. What reports made the bulls giddy?
The manufacturing production report definitely factored in the pound bulls’ party when it showed only a 2.9% decline for the month of June. If you remember, market players were expecting a decline of 4.0%. The industrial production data also exceeded expectations with only a 2.5% downtick against predictions of a 3.3% decline in June. Last but not the least, the NIESR put its GDP estimates at -0.2% in July, which is an improvement from its -0.7% reading in June.
Today only the BOE inflation report at 9:30 am GMT is scheduled for release. Though major central banks are deciding to keep their interest rates and stimulus projects steady this month, it might be a good idea to see the BOE’s inflation projections. After all, we never know when the BOE might cut its interest rates next!
Make that two in a row! GBP/USD ended the day in the green as it closed 21 pips up from its 1.5632 open price. GBP/JPY, on the other hand, logged in a tiny loss as it closed 12 pips down from its 122.92 open price. What’s up with that?
Although the U.K. didn’t release any economic data yesterday, pound pairs were rocked by BOE Governor Mervyn King’s speech as the central bank head talked about the chances of an interest rate cut. Apparently, King believes that a rate cut could turn out to be counterproductive for the U.K. economy as it could result in huge losses for banks and financial institutions. This announcement allowed the pound to gain ground against its counterparts during the London session as traders wiped out any rate cut speculations from the BOE.
The BOE inflation report painted a different picture. Data revealed that the U.K. economy was still in dire need of further stimulus as inflation was projected to remain below target for the next couple of years.
There are no major reports due from the U.K. today, leaving traders to mull over the longer-term impact of King’s recent statement on the U.K. economy and on the British pound. Only the trade balance and CB leading index are due starting 8:30 am GMT today. The trade deficit is estimated to widen from 8.4 billion GBP to 8.5 billion GBP while the CB leading index could post another drop for June following the 0.8% decline seen last May.
Another day of consolidation for the pound, as it practically stayed within its average daily range versus the yen and the dollar. Will we see more of the same today or could we finally see an extended move?
The only data released from the U.K. yesterday was trade balance figures, which unfortunately, printed slightly worse than expected. The trade deficit checked in at 10.1 billion GBP, which was bigger than the anticipated 8.5 billion GBP deficit. This could mean that U.K. goods are relatively expensive and that they can’t compete in price wars on a global scale.
For today, we’ve got more inflation data headed our way via the producer price index. The old chaps over at London are saying that producers paid 1.4% more for their raw materials last month. Keep in mind that producers normally pass on any additional costs to consumers, so this is a good gauge of inflation.
I’d pay close attention to this figure, because if it comes in lower than expected and indicates that inflation remains subdued, it could give the Bank of England reason to cut rates down the road, which would only mean weakness for the pound.
The pound was off to a weak start on Friday but it pulled up for a strong finish as it managed to end the week mostly in the green. GBP/USD closed at 1.5683 while GBP/JPY chalked up a tiny loss as it ended at 122.74.
Data from the U.K. did not disappoint last Friday as the PPI input for July came in at 1.3% while the PPI output stayed flat during the month. However, the June figures were revised down to show a 2.9% drop in PPI input and a 0.6% decline in PPI output, both of which suggest subdued inflationary pressures in the near term.
There are no reports due from the U.K. for today as Brits are probably resting after all those London Olympics festivities. Tomorrow, the U.K. will release its annual CPI figure which is expected to come in at 2.3%. Claimant count change and MPC meeting minutes are due Wednesday while the U.K. retail sales figure is set for release on Thursday.
With all these red flags on the U.K.'s schedule, this week should be a really exciting one for the pound pairs. Make sure you do your research before trading GBP/USD and GBP/JPY this week, all right?
The pound both dealt and took damage yesterday as it gained ground against the dollar but weakened against the euro. What’ll happen to it now that the Olympics are over?
It was a pretty uneventful day for the pound yesterday as it had no real motivation to bust a move. The day’s lone release, the RICS house price balance report, didn’t earn so much as a yawn from the markets as it printed a reading of -24% versus the forecasted reading of -23%.
But worry not, my forex homies, because today, we’ve got a potential market-shaker on our hands! The U.K. is scheduled to publish its monthly CPI report in the London session, which most believe will show a 2.3% increase in prices, down from 2.4% in June. Meanwhile, the core CPI is expected to remain unchanged and print a reading of 2.1%.
An downside surprise from this report would give the BOE more room to easy policy and could result in a pound sell-off, so don’t you dare miss this release at 8:30 am GMT!
Chop, chop, chop! GBP/USD made a few spikes here and there but managed to end right where it started at 1.5685. GBP/JPY, on the other hand, was able to pocket some gains as it closed at 123.49. Which reports moved the pound pairs yesterday?
U.K. inflation surprised to the upside for July, breaking its streak of declines and weaker than expected results. Annual CPI jumped from 2.4% to 2.6% during the month instead of falling to 2.3% while the retail price index rose from 2.8% to 3.2% in the same period. Components of the data revealed that the increase in price levels was spurred by a sharp rise in clothing, airfare, and footwear in the weeks leading up to the London Summer Olympics. However, since house prices weren’t really affected by the Olympic games, the house price index missed expectations of a 2.7% rise and came in at only 2.3%.
These stronger than expected inflation figures gave pound pairs a boost during the U.K. session, but GBP/USD’s gains were quickly erased once the U.S. session rolled along. As it turns out, Uncle Sam printed better than expected retail sales data which triggered dollar-buying.
Today, the U.K. is set to release another set of top-tier data, namely its claimant count change figure and MPC meeting minutes at 8:30 am GMT. The number of people claiming unemployment benefits is expected to tick up from 6.1K in June to 6.2K in July, reflecting a slight downturn in the U.K. labor market. This could be negative for the pound unless the actual figure posts a smaller than expected increase in claimants.
Meanwhile, the MPC meeting minutes are expected to reveal a unanimous 0-0-9 decision when it came to the BOE’s announcement to keep rates on hold during their previous policy statement. Make sure you also take a look at what each of the committee members had to say during their meeting since this could set the tone for their future policy decisions.
Quite a busy day for the U.K., eh? Be extra careful when trading those pound pairs today!
While the pound’s battle against the dollar was limited to a draw, it managed to steal a few pips away from the yen. GBP/USD formed another doji as it ended unchanged at 1.5684, but GBP/JPY inched up 21 pips to 123.70. Will today’s retail sales report spur a pound rally?
Instead of printing an increase of 6,200, jobless claims actually DROPPED by 5,900 last month! Apparently, the job market fared so well last month that the unemployment rate ticked down from 8.1% to 8.0%. Many believe hiring picked up because of the Olympics. But if that really was the case, y’all gotta wonder if the U.K. can keep this up now that the games are over.
In other news, the MPC meeting minutes delivered another surprise to the markets - that policymakers actually agreed to something! According to the minutes, MPC members voted unanimously to keep monetary policy unchanged in its rate decision earlier this month. It also showed that there were some members that were tempted by the idea of more stimulus, as the BOE predicts the economy will contract by 0.2% this year.
Today, we’ve got another hot report coming out in the London session, this time in the form of the July retail sales report. Did the Olympics help boost consumer spending or did it bog it down? Forecasts see sales growth slowing from 0.1% to 0.0%. We’ll find out just how accurate these predictions are at 8:30 am GMT!
Do they release Olympic Gold medals for solid forex performance? Because the pound absolutely killed it against the dollar and yen in yesterday’s trading games! GBP/USD rose 54 pips to finish at 1.5737 and is now testing a major resistance point. Meanwhile, GBP/JPY soared to 124.81, up 111 pips from its opening price!
The pound’s domination can be attributed to one thing: solid retail sales data. Retail sales growth was projected to come in flat last month, but expectedly printed a 0.3% uptick. Furthermore, June’s figure was revised up from 0.1% to a smashing 0.8%! Boom baby! Talk about a feel good story!
This indicates that consumer spending could be on the rise and we could see the British economy turn it around soon.
No biggies lined up for the U.K. today, so chances are we won’t see GBP/USD break through the long-term resistance level. Still, make sure you check out my U.S. commentary for the 411 on what might drive trading during today’s New York session!
Where to, pound traders? Though the U.K.’s currency traded higher against the yen, it also pared its gains against the Greenback, the euro, and the franc. There weren’t any reports released, so what had caused the move?
Between the lack of volume and market-moving reports from the major economies, it was easy for the pound bulls to take profit ahead of the weekend.
Don’t worry, you’ll soon get your fix of U.K. data this week when the Rightmove house price index is released in a couple of hours. Then, on Tuesday at 8:30 am GMT we’ll see the public sector borrowing, which will be followed up by the BBA mortgage approvals data on Thursday also at 8:30 am GMT and the revised U.K. GDP on Friday around the same time.
Will the pound traders remember the solid retail sales data last Thursday, or will they dance to the tune of risk appetite today? Be on your toes for any game-changing reports, kids!
Sellers were in control of GBP/USD for most of the day, but before the New York session came to a close, buyers were able to stage a rally that took the pair back to its opening price. When all was said and done, Cable closed 5 pips higher at 1.5610.
The release of the Rightmove house price index might’ve had a hand in the pound’s slow start as it showed a 2.4% decline in house prices, which is even worse than the 1.7% slide that we saw last month. Take note, homies, this was actually the biggest drop EVER recorded by the Rightmove index!
Now, let’s see if today’s releases can give pound bulls something to cheer about.
At 8:30 am GMT, the U.K. will be unloading its public sector net borrowing report, and forecasts say we’ll likely see net borrowing slip from 12.1 billion GBP to -2.7 billion GBP. Then at 10:00 am GMT, CBI industrial order expectations data will be available. Look for the index to slip from -6 to -8 for the month of August.