Oh snap! The pound just skyrocketed to its three-month high against the dollar despite disappointing data! After opening at 1.5710, GBP/USD traded higher all the way up to 1.5804 before closing the day at 1.5776.
Yesterday, it was reported that the U.K.'s public sector net borrowing incurred a 1.8 billion GBP deficit in July. The figure fell short of market expectations as market junkies anticipated a more modest deficit of 2.7 billion GBP to follow the 12.2 billion GBP surplus that we saw for June.
On top of that, the CBI industrial order expectations report also printed much lower than the -8 forecast for August when it printed at -21.
So what fueled the pound?
It was none other than the ECB. It looks like rumors about the central bank putting a cap on bond yields of peripheral EZ nations spurred investorsâ appetite for risk.
Given that and taking into consideration that our forex calendar is blank for reports from the U.K. today, it would be a good idea to keep an ear out for updates regarding the issue as it could once again affect the poundâs fate in todayâs trading.
Mixed results for the pound yesterday, as it soared higher versus the dollar but got lit up by the yen. GBP/USD broke out of its recent range to finish at 1.5867, 91 pips higher on the day. Meanwhile, GBP/JPY threated to make new highs above 125.50, but lost momentum and eventually finished at 124.62, down 39 pips from its opening price.
Despite the lack of data, the pound was able to rally against the dollar for two reasons: a broad improvement in risk sentiment and overall dollar weakness. Make sure you check out my U.S. commentary for the 411 on why the dollar sank yesterday!
For today, all weâve got is second tier data in the form of BBA mortgage approvals and the CBI realized sales report.
At 8:30 am GMT, the British Bankers Association will be releasing the latest mortgage approvals figures. Word on the street is that 28,200 mortgages were approved last month, which would mark a decent improvement over the 26,300 approvals we saw last month.
Later on at 10:00 am GMT, the CBI realized sales index is projected to print at 16, up from the 11 we saw in July. Keep in mind that the last few release have been way off target, so donât be surprised if we see the same today.
If both these reports come in better than expected, it could help the good times roll for the pound. Watch out!
After racing up the charts like a Ferrari in Wednesdayâs trading, it looks like the pound ran out of fuel on the charts yesterday. GBP/USD rallied above 1.5900 but didnât find enough demand at the major psychological handle. By the end of the New York session, the pair was 7 pips below its opening price at 1.5860.
It would seem that some traders pared their short-dollar positions in yesterdayâs trading. Unfortunately for the pound, mixed data rolled out of the U.K. and gave investors little reason to buy it.
The CBI Realized Sales index for August printed at -3 and fell waaay off expectations. Market junkies had expected an improvement in sales for the month with the forecast up at 16 from Julyâs 11 reading.
On a more positive note though, BBA mortgage approvals rose in July by 28,400 and topped the consensus by 200.
But donât fret! Today we have a couple of top-tier data from the U.K. which may just boost the pound. Well, that is, if they come in better than expected.
At 8:30 am GMT, the revised GDP report for Q2 2012 will be on tap. Keep in mind that an upward revision is expected, with the forecast up at -0.5% from the initial reading of -0.7%.
Along with that, the preliminary business investment report for the same quarter will also be released and it is eyed at 2.8%.
Make sure youâre on your toes for them later, ayt? Peace out, folks!
After its impressive performance during the first half of the week, Cable fell considerably short last Friday. From its day open price at 1.5860, it fell 56 pips lower to end the U.S. trading session at 1.5805. What caused the declined?
Cableâs drop was caused by a mix of external and internal events. A report from the U.S. showed that durable goods orders rose by a whopping 4.2% in July, almost double the 2.6% the market had initially expected.
In the U.K., the preliminary business investment report showed a 0.1% decrease for the second quarter of 2012 while the revised GDP report confirmed that U.K. did indeed shrink 0.5%.
A lot of medium-tier economic data scheduled for release this week starting with the Nationwide HPI tomorrow. On Thursday, expect to see the Net Lending to Individuals and Mortgage Approvals Report. On Friday, watch out for the Gfk Consumer Confidence survey. And last by not the least, the annual Jackson Hole Symposium will happen on Saturday. This isnât a U.K.-exclusive event, but it could still indirectly have an effect on Cableâs price action.
Where are all the pound bulls at? The currency sustained another loss against the dollar yesterday. GBP/USD closed the day 22 pips below its opening price at 1.5793. That extends the poundâs losing streak to three days!
There wasnât any economy data released from the U.K. yesterday as banks closed for the Summer Bank Holiday. It would seem that that left the pound vulnerable to market sentiment.
Our forex calendar is once again blank for reports for the currency today. This probably means that weâll see the poundâs price action be dictated by the marketâs mood. So if youâre looking to trade the pair, keep an ear out for news that could spark risk aversion or risk appetite.
For instance, earlier today in the Tokyo session, we saw the pound spike down against the dollar and the yen. Some market junkies say that the move was caused by bad news about Japanâs economic outlook getting downgraded and that new home sales in Australia fell in July.
Be on your toes, ayt? Good luck!
The poundâs price action yesterday was as mixed as a bag of nuts. While it was able to rally versus the safe haven dollar after an extremely disappointing CB Consumer Confidence survey, the pound fell was sold-off against the euro after the successful Spanish debt auction. The pound marked a 31-pip gain over the dollar but also posted a 28-pip loss versus the euro.
The CB Consumer Confidence survey from the U.S. came in at 60.6, significantly lower than the 65.8 reading initially expected. The disappointing figure stoked speculation that Bernanke would finally confirm more QE at the upcoming Jackson Hole on Friday.
No major economic report scheduled this Wednesday for the U.K. but there more tier 1 report from the U.S. that could have a strong effect on the pound. Iâm talking about theU.S. preliminary GDP report which will be released at 12:30 pm GMT. If the preliminary GDP misses forecast again, the pound could stage another rally versus the dollar.
Letâs all give the pound a pat on the back for dominating its counterparts despite the lack of economic data from the U.K.! Cable inched 7 pips higher at 1.5831, while Guppy also enjoyed a 33-pip gain. Even EUR/GBP fell by 27 pips! What gives?
No data was released from the U.K. yesterday, so the pound might have profited from traders returning from their holiday early this week. Then again, it could also have been boosted by reports that the government officials are cooking up new plans to pull the country out of a recession.
Maybe weâll see more volatility today at 8:30 am GMT when the net individual lending report is released together with the mortgage approvals and money supply report. Then, at 11:01 pm GMT weâll also see the GfK consumer confidence data. The reports are generally expected to come in higher than their previous figures, but make sure your trade setups can handle a surprise or two from these reports!
After consolidating for the majority of the European trading session, Cable was hit by a wave of selling due to risk aversion during the U.S. session. The pair fell to a new 2-day low as it dropped below the 1.5800 handle.
According to numerous news reports, risk aversion was caused by renewed concerns of slowing global growth. In the U.S., the unemployment claims, the Core PCE Price Index, and the Personal Spending were all worse than expected.
In the U.K., data was more positive. The Net Lending to Individuals came in line with forecast at 900 million GBP, opposite the -100 million GBP seen the previous month. Mortgage Approvals were also as expected at 47,000.
The Nationwide HPI is the only report scheduled to be released today. It will come out at 6:00 am GMT (or 7:00 am considering DST adjustments) and is predicted to show a 0.1% gain. The report doesnât normally have a notable effect on price action, but keep an eye on the report nonetheless just in case it does.
What a way to end the week! Thanks to a positive U.K. report and hopes for QE3 from the Fed, Cable capped the week near its previous weekâs highs while Guppy caught a 12-pip gain. Will the bulls extend their gains this week?
Even before Big Ben hinted at QE3 in his speech in the Jackson Hole meeting, the currency warriors were already busy buying the pound as the Nationwide house price index showed a 1.3% gain in August after falling by 0.8% in July.
Will the U.K. data this week continue to motivate the pound bulls? The U.K. will start the week with manufacturing PMI report at 8:30 am GMT, followed by the BRC retail sales monitor at 11:01 pm GMT. Both reports are expected to come in a bit stronger than their previous numbers, but be ready for a few surprises!
If you donât feel like trading today, you can always trade the other major reports on the docket this week. This includes the services and construction PMI numbers, manufacturing production, PPI, and even the BOEâs interest rate decision. Check out Forex Gumpâs piece on the major data this week for more information!
Chop, chop, chop! Cable spiked here and there yesterday but managed to end in the green at 1.5890. Guppy, on the other hand, suffered a tiny loss as it closed 6 pips below its 124.44 open price.
Since U.S. traders were off enjoying their Labor Day holiday, liquidity was a tad lower during yesterdayâs trading, which meant that volatility was higher than usual. Because of that, GBP/USD had a choppy day in the markets before it got a strong boost from better than expected U.K. manufacturing PMI.
For the month of August, manufacturing conditions improved slightly, although the PMI still signaled a contraction. The reading climbed from 45.2 to 49.1, outpacing the consensus at 46.1.
Today, itâs the construction industryâs turn to release its PMI for August at 8:30 am GMT. Analysts are expecting the figure to dip from 50.9 to 50.1, reflecting a slower expansion for the month. Make sure you keep an eye out for the actual release because weaker than expected results or a reading below 50.0 could force the pound to return its recent gains.
The poundâs price action was as mixed as the colors of Cyclopipâs jerseys as the U.K.âs economic data got tangled with risk sentiment. Cable dropped by 15 pips while Guppy inched 12 pips higher than its open price. Hereâs what happened.
The pound bulls dominated the early London session as the PMI reports from the U.K. generally came in better than expected. Activity in the service sector expanded by its fastest pace in five months while the construction PMI just missed expectations of a 50.1 reading by printing at 49.0.
No economic data is scheduled to follow the BRC shop price index report that was released a couple of hours ago. According to the report, prices in BRC-member stores rose by 1.1% in August after growing by 1.0% in July.
Since the docket is empty for today, keep an eye out for any news from the other major economies that might affect appetite for the high-yielding pound. Good luck!
What a topsy-turvy day for the pound! GBP/USD got an extra dose of volatility yesterday as it dipped to a low of 1.5826 then jumped to a high of 1.5935 before closing at 1.5901. What the heck happened during yesterdayâs trading sessions?
Do you know whatâs the most surprising part about yesterdayâs strong cable rally? Itâs the fact that the U.K. didnât release any economic reports at all! Apart from the improvement in risk sentiment, tradersâ positioning ahead of the BOE monetary policy statement was probably another reason that boosted the pound against its major counterparts.
The Bank of England is set to make its monetary policy announcement at 11:00 am GMT today and they are expected to keep rates unchanged at 0.50% and make no additional asset purchases. Note that the recently held London Olympics games had a positive impact on spending and economic growth last month, which suggests that BOE Governor King and his men might be a little more upbeat with their assessment.
Score another one for the pound! Like a cobra waiting to strike, the pound was ever so still and silent against the dollar during the Tokyo and London sessions. But once the New York session began, it made its move, breaking out of consolidation to push the pair higher. In the end, Cable closed at 1.5938, up 37 pips on the day.
Surprisingly enough, it wasnât really the BOE rate statement that got pound bulls all riled up because the central bankâs rate decision was no shocker. The central bank decided to leave monetary policy unchanged and keep rates at 0.50% - exactly what the markets had expected! With recent reports coming in more upbeat than expected, the BOE had no reason to rush into easing.
To be honest, Iâm particularly interested in hearing exactly how the central bank evaluated the economyâs recent performance. But since the rate decision wasnât accompanied with a statement, it seems like weâll have to wait a couple weeks more for the MPC meeting minutes to be released so we can get a peek into the minds of U.K. policymakers.
Today, the action will continue with manufacturing production (seen printing a 2.1% rise) and PPI input data (seen at 1.6%) at 8:30 am GMT. Both of these are considered high-impact reports, so they have the potential to move the markets especially if they print surprising results. Good luck, fellas! Make the last day of the week count!
Up, up, and away! GBP/USD soared after the U.S. released its NFP report last Friday as the pair broke above the 1.6000 major psychological resistance. GBP/USD reached a high of 1.6035 before it closed at 1.6008. Will it be able to hold on to its gains this week?
The U.K. released a couple of better than expected data last Friday, with its manufacturing production and PPI reports surpassing expectations. Manufacturing production posted a 3.2% rebound for July, better than the estimated 2.1% increase and erasing most of Juneâs 2.9% drop. Meanwhile, PPI input prices showed a 2.0% increase while PPI output prices posted a 0.5% uptick.
Additionally, GBP/USD was able to get another boost from weaker than expected U.S. NFP figures, which showed that net hiring for August came in below 100K. This sparked a fresh round of QE3 speculations, which triggered strong USD selling.
The only major report on the U.K.'s schedule for this week is its claimant count change report due Wednesday 8:30 am GMT. For today, a medium-tier report in the form of the RICS house price balance is set for release around 11:00 pm GMT. 22% of surveyors are expected to report that house prices dropped in their areas last month, which would be slightly better news compared to the 24% figure seen last July. A weaker than expected reading might force the pound to return some of its recent gains so make sure you keep close tabs on this report if youâre trading pound pairs!
You didnât think the pound would just keep rising, did you? After posting three straight days of gains, it was bound to pull back! GBP/USD started the week by gapping up over the weekend, but it spent the rest of the day trading below the week open. From its opening price of 1.6017, it slipped back below the 1.6000 handle to post a 28-pip loss.
It seems the aggressive bullishness for the pound that we saw last Friday didnât spill over to this week, eh? But maybe todayâs release will change that.
Earlier today, we got an upside surprise in the RICS house price balance report, which printed a decline of 19% instead of 22%. That house prices fell at a slower pace last month seems to be lifting up home sellersâ spirits. In fact, according to the study, those in the business feel optimistic about the outlook for the housing industry, believing that the governmentâs recent actions will help raise home sales in the coming year.
Later today, weâll take a look at trade balance data at 8:30 am GMT. Look for the U.K.'s deficit to narrow from 10.1 billion GBP to 8.9 billion GBP.
Mixed results for the pound yesterday, as it stumbled against the yen, but rallied hard versus the dollar. GBP/JPY closed lower for the third consecutive day, closing 19 pips lower at 124.93, while GBP/USD closed at a new high at 1.6070, up 81 pips from its opening price.
The pound may have gotten a small boost from trade balance figures, which showed that the U.K. trimmed its budget deficit slightly, as it posted a deficit of just 7.1 billion GBP last July. Not only was this better than Juneâs figure of a 10.1 billion GBP deficit, but was also better than the projected 8.9 billion GBP deficit.
Why are better trade figures significant? Take note that the Bank of England already acknowledged that a strengthening pound may make British exports less attractive to importers. A tightening deficit signals that export demand is improving, which gives the BOE less reason to implement additional liquidity measures in order to weaken the pound.
For today, weâve got U.K. employment data headed our way at 8:30 am GMT. Forecasts are that an additional 100 people filed for jobless benefits last month, while the unemployment rate is projected to remain steady at 8.0%. If these reports come in better than expected, it could give the pound a nice bump up during the London session.
With help from yesterdayâs awesomely upbeat employment report, Cable racked up some more pips as it climbed from its opening price of 1.6070 to end the day at the 1.6100 handle. Will the pound continue to gain ground against the dollar today?
Stats from last month reveal that the number of individuals who claimed unemployment benefits dropped by 15,000. Awesome results, huh? But itâs much more awesome when compared to the increase of 100 that most had predicted. And take note, homies, this is actually the biggest monthly drop in 2 years!
Apparently, hiring picked up last month, which explains why many workers reentered the work force. In turn, this led the unemployment rate to unexpectedly tick up from 8.0% to 8.1%.
While all of this is generally good news, itâll probably take more than this to get the BOE to lean further away from monetary easing.
Nothing major on the economic calendar from the U.K. today. But keep in mind that the FOMC statement is scheduled today at 4:30 pm GMT. This is an event not to be missed, fellas!
Due to the Federal Reserveâs QE3 announcement, the pound was able to jump to a fresh 4-month high versus the safe haven dollar. As of this writing, the pound is sitting at 1.6150 against the dollar, which is a very respectable 75 pips higher from its lowest point yesterday.
The Fed delivered what the market expected⌠and more. Instead of simply expanding its QE program by 40 billion USD a month, the Fed also attached an âopen-endedâ clause. The Fed indicated that it would undertake additional purchases and implement other monetary policy tools as appropriate if the labor market does not improve significantly.
No data scheduled for release today, but given the big news released yesterday from the Fed yesterday, we could still see a lot of volatility from the pound. Itâs important to note that the Fedâs announcement came [B]AFTER[/B] the European trading session, which means European traders still havenât adjusted to the news. Letâs see how they react later once London opens.
Despite the lack of economic reports, the pound still managed to rake in pips in Fridayâs trading. GBP/USD rallied past the 1.6200 handle after opening at 1.6151. By the end of the New York session, the pair had settled at 1.6227.
It would seem that Ben Bernankeâs strong dovish words in Thursdayâs FOMC Statement still affected price action up until Friday. Consequently, most higher-yielding currencies extended their rallies against the dollar.
Whether or not the same sentiment would carry on in todayâs trading, we have yet to find out. So make sure you keep tabs on the marketâs mood, ayt? If risk appetite is still up, I wouldnât be surprised to see the pound extend its winning streak to five!
Yo, Mr. Pound, take your place atop the currency rankings! The pound was the only major currency to outpace the dollar yesterday, as GBP/USD closed 25 pips higher at 1.6245. Will we see a repeat performance today?
For today, weâve got inflation data on tap as the CPI report is scheduled for release at 8:30 am GMT.
Early forecasts are predicting that inflation will tick in at 2.5%, slightly lower than last monthsâ release of 2.6%. Take note that inflation is way off its highs from a year ago, where it peaked at a ridiculous 5.2%. Now that inflation is well inching closer to the BOEâs target of 2.0%, the BOE has a lot more leeway with regards to monetary policy.
Aside from that report, make sure you check out my euro zone commentary for more updates on whatâs happening in the rest of Europe!