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theNews
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#601

GBP/USD forecast for the week of August 17, 2015

The GBP/USD pair bounced off of the trend line that has been so reliable recently, and as a result it shows that we are still interested in going long. The market should head towards the 1.58 level given enough time, and we look at short-term pullbacks as buying opportunities. Once we get above the 1.58 level, we feel that this market will then head towards the 1.60 level given enough time. We believe that as long as we can stay above the uptrend line, we are essentially going to be “long only.”

theNews
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#602

UK Preview: Falling Prices Set to Boost Shoppers' Appetite

The median estimate suggests UK CPI inflation remained unchanged at 0% in July. The core CPI, a less volatile gauge stripped of energy and food prices, is estimated to have stayed at 0.8% - the lowest level in fourteen years. The UK's Office for National Statistics (ONS) is releasing July figures on Tuesday next week.

Despite expectations pointing to no change in inflation, notable falls in oil and petrol prices in July this year, compared with the same month a year ago, suggest inflation may have slipped back below zero again.

According to the AA Fuel Report, the UK national average price of unleaded petrol in July this year was as much as 11% below the average petrol price back in July 2014. And the fact that transport costs in July last year were the main upward driver to the annual CPI change, we can expect marked downward pressure from this segment on this year's July inflation rate.

The price of Brent crude fell between June and July this year by 6.3%, and was a massive 40% below the level seen in July last year. The Bank of England (BoE) reiterated in its August forecast that as much as three quarters of downward deviation of CPI inflation from the 2% target has come from volatile prices of energy and food. Those external factors have been keeping the overall CPI below the target since December 2013.

The BoE consequently struck a more dovish tone reflected in its August Inflation Report, revising down the near-term inflation outlook on the back of strong downward external pressures stemming from weak oil prices and sterling appreciation.

"In light of the reduction in oil prices and appreciation of sterling over the past three months, it appeared that the increase in inflation over the following year would be more gradual than had previously been supposed," the BoE's Monetary Policy Committee (MPC) minutes read in August.

Relative to the May Inflation Report, the short-term inflation forecast was lowered almost by half to project an inflation rate of 0.3% on a median basis by the end of 2015, then rising slightly to 1.5% at the end of 2016, reaching the 2% target in the third quarter of 2017, should the bank rate follow the gently rising path implied by market yields. The lower near-term inflation outlook implies gradual interest rate increases, confirming current market expectations of a February lift-off, but with the risk of a delay to May remaining plausible.

Shop price deflation, as measured by the British Retail Consortium (BRC), also adds to this downward trend. In its July survey, the BRC estimated the overall shop price deflation fell further down to 1.4% in July, lower than the 1.3% fall in June.

source

theNews
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#603

'No-flation' in the UK reduces the likelihood of a BoE rate hike

From the UK Telegraph over the weekend:

  • Official inflation data is due from the UK this week
  • CPI is expected to remain at 0% y/y ... that's according to the latest Bloomberg survey of economists
  • That'll be 5 out of the last 6 months that inflation has touched zero or below
  • The Bank of England's target is 2%
  • 'No-flation' pushes the prospects for a UK rate hike further out ....
theNews
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#604

BOE's Forbes comments on UK interest rates, need hike 'well before' inflation hits target

Comments from Bank of England's Kristen Forbes via Reuters:

  • Says interest rates will need to be raised "well before" inflation hits 2 pct target
  • Waiting too long to raise rates would risk undermining economic recovery
  • China yuan devaluation means "bit more time before inflationary pressures build in the UK"
  • Right time to raise rates depends on more evidence of inflation heading towards target
  • Reuters with the headlines, nothing further at this stage

    More here at the UK Telegraph, in a piece written by Forbes:

  • A solid recovery is finally here
  • Increasing interest rates prematurely could moderate companies' willingness to invest and consumers' willingness to spend
  • But unfortunately monetary policy works with lags
  • "Maintaining interest rates at the current low levels during an expansion risks creating distortions. Therefore, interest rates will need to be increased well before inflation hits our 2pc target. Waiting too long would risk undermining the recovery-especially if interest rates then need to be increased faster than the gradual path which we expect."
  • -

Kristin Forbes is an economist. She is an external member of the Monetary Policy Committee of the Bank of England.

theNews
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#605

GBP/USD: Sterling Little Changed Ahead of UK CPI

Ahead of the busy UK data session on Tuesday, sterling was seen flat, unable to surpass the $1.56 handle.

Today's UK CPI data for July is not expected to show any significant rise in price pressures given the sharp falls in commodity prices last month, with WTI oil prices currently trading at six-year lows.

The monthly CPI number should show a decline of about 0.3%, while year-on-year the number is expected to remain unchanged at 0%.

"Though it wouldn’t be a big surprise if we slipped into negative territory here (annual figure) again as well," Michael Hewson from CMC Markets UK commented on Tuesday.

The pound remains trading in a tight range this morning, virtually flat at $1.5580 ahead of European open.

Strong external lowflationary forces are somewhat being offset by domestically-generated inflationary pressures, such as wages.

According to the latest labor market data, regular wages - those showing a more underlying growth stripped of volatile bonus payments - continued to increase by 2.8% over the quarter to June, which was the highest rate of growth since 2009.

For now, record-low inflation, combined with rising wages, offers higher real income to households, who in turn feel less pressure on their budgets after years of above-target inflation and low wages. But the risk that inflation overshoots the target again remains highly possible if the Bank of England continues to sit on rates for longer than necessary.

source

theNews
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#606

GBP/USD: Sterling Elevated by BoE Rate Hike Speculation

Upbeat Core UK Inflation figures pushed sterling above $1.57 in the previous session, before paring its gains slightly. On Wednesday sterling moved higher again ahead of a day that will see the focus almost entirely on US proceedings.

Core CPI picked up to 1.2% in July, up from a fourteen-year low of 0.8% in June, and 0.3 percentage points above the market estimates.

Sterling consequently surged, driven by expectations that the time of the first hike in the Bank of England's (BoE) base rate is coming closer. Signs of a rise in domestic inflation should also reinforce inflation hawks at the BoE's nine-strong rate-setting committee, who have been arguing that a strong labor market and rising wages should continue to add pressure on inflation.

On Wednesday sterling continued to add gains, trading at a session high of $1.5674, up 0.12% on the day around the European open.

Markets will be watching closely US session which offers the latest US CPI numbers for July as well as the Federal Open Market Committee (FOMC) minutes, with both expected to support the USD.

"If the latest US CPI numbers for July, also surprise by coming out a little stronger than expected we could well see a similar jump in the US dollar, though given some of the recent weakness in commodity prices in the last month, an upside surprise would be unexpected," Michael Hewson from CMC Markets UK wrote on Wednesday.

Wall Street economists are projecting the CPI to edge 0.2% higher in July from a month earlier. A less volatile "core" component of the indicator is expected to rise at a similar pace.

source

theNews
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#607

UK retail sales July mm +0.1% vs +0.4% exp

Latest UK retails data now out

  • -0.1% prev rev up from -0.2%
  • yy + 4.2% vs +4.4% exp vs +4.2% prevrev upfrom +4.0%
  • ex auto,fuel mm +0.4% vs +0.4% exp vs -0.3% rev down from -0.2%
  • yy +4.3% as exp vs +4.1% prev

Softer headline but better revisions and core helping to temper GBP falls

Cable had a quick look at the 1.5635 area highlighted in my preview but now 1.5652

EURGBP 0.7105 from 0.7118 just ahead of the 0.7120 first res/offers also highlighted here

theNews
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#608

GBP/USD forecast for the week of August 24, 2015

The GBP/USD pair initially fell during the course the week but found enough support below to turn things back around and form a hammer. With that being the case, the hammer looks as if it is telling us that the markets going to try to reach towards the 1.58 level, and then ultimately the 1.60 level. We have no interest whatsoever in selling this pair, and believe that any pullback and we get at this point in time will end up being a buying opportunity given enough time.

theNews
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#609

GBP/USD weekly outlook: August 24 - 28

The pound ended the week near seven-week highs against the broadly weaker dollar on Friday as concerns that slowing global growth could delay a U.S. rate hike pressured the greenback lower across the board.

GBP/USD hit highs of 1.5722, the most since July 1 and was last at 1.5691, little changed for the day.

The dollar fell more than 1% against the euro and the yen on Friday as weak factory data from China added to concerns over slowing global growth and reinforced expectations that the Federal Reserve may delay hiking interest rates.

Manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, a report showed, exacerbating fears over a slowdown in the world’s second-largest economy.

Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.

Wednesday’s minutes of the Federal Reserve’s July meeting indicated that there was little consensuses on when to start raising interest rates, prompting investors to push back expectations for a rate hike.

Fed officials believe the economy is nearing the point where interest rates should move higher, but noted that the subdued U.S. inflation outlook inflation and weakness in the global economy could still pose risks to the U.S. economic outlook.

Demand for sterling continued to be underpinned after an uptick in inflation and comments by outgoing Bank of England policymaker David Miles who said Tuesday that a rate hike is coming "pretty soon" boosted expectations for higher interest rates.

But the pound was sharply lower against the stronger euro, with EUR/GBP jumping 1.29% to 0.7255.

The single currency received an additional boost after data showed that euro zone private sector growth unexpectedly accelerated this month as new orders rose.

The preliminary reading of the euro area’s composite index, which covers both the manufacturing and service sectors, rose to 54.1 this month from July's 53.9. Economists had expected the index to tick down to 53.8.

The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.97% to a five-week low of 94.84.

In recent months the dollar had been boosted by expectations that the improving U.S. economy would prompt the Fed to raise borrowing costs as soon as September.

In the week ahead, investors will be looking ahead to Wednesday’s data on U.S. durable goods orders for a fresh reading on the strength of the economy. A speech on Monday by Atlanta Fed President Dennis Lockhart will also be closely watched.

Revised data from both the U.S. and the U.K. on second quarter growth will also be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

read more

theNews
Join date: 2012.10.01
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#610

GBP/USD weekly outlook: August 24 - 28

The pound ended the week near seven-week highs against the broadly weaker dollar on Friday as concerns that slowing global growth could delay a U.S. rate hike pressured the greenback lower across the board.

GBP/USD hit highs of 1.5722, the most since July 1 and was last at 1.5691, little changed for the day.

The dollar fell more than 1% against the euro and the yen on Friday as weak factory data from China added to concerns over slowing global growth and reinforced expectations that the Federal Reserve may delay hiking interest rates.

Manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, a report showed, exacerbating fears over a slowdown in the world’s second-largest economy.

Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.

Wednesday’s minutes of the Federal Reserve’s July meeting indicated that there was little consensuses on when to start raising interest rates, prompting investors to push back expectations for a rate hike.

Fed officials believe the economy is nearing the point where interest rates should move higher, but noted that the subdued U.S. inflation outlook inflation and weakness in the global economy could still pose risks to the U.S. economic outlook.

Demand for sterling continued to be underpinned after an uptick in inflation and comments by outgoing Bank of England policymaker David Miles who said Tuesday that a rate hike is coming "pretty soon" boosted expectations for higher interest rates.

But the pound was sharply lower against the stronger euro, with EUR/GBP jumping 1.29% to 0.7255.

The single currency received an additional boost after data showed that euro zone private sector growth unexpectedly accelerated this month as new orders rose.

The preliminary reading of the euro area’s composite index, which covers both the manufacturing and service sectors, rose to 54.1 this month from July's 53.9. Economists had expected the index to tick down to 53.8.

The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.97% to a five-week low of 94.84.

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theNews
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#611

UK public sector net borrowing excluding bank interventions moved into a surplus in July of £1.3 billion, which is the first July surplus since the same month in 2012 and a marked improvement from a deficit of £9.4 billion in June this year, the Office for National Statistics (ONS) informed on Friday.

The overall borrowing over the current fiscal year between April and July decreased by as much as 23.3%, from £31.4 billion measured during the same period last year, down to £24 billion this year.

Public coffers have seen notable improvements so far this year as the economy maintains its healthy pace and the labor market has been improving sharply in recent quarters.

In July, the primary boost to the UK public finances came from a marked rise in corporation tax receipts, increasing 5.2% over the year to July and as much as 9.5% so far this fiscal year, when compared with the same period last year. Both income tax and VAT receipts rose as well in July, rising 3.3% and 5.3% respectively. The decrease in borrowing in July was also due to a fall of £8.1 billion in central government net borrowing.

The public sector net debt at the end of July was £1.5 trillion, equivalent of 80.8% of the total GDP, and an increase by £73.4 billion compared with same month a year ago.

Today's data also showed that a European Commission (EC) demand for £2.9 billion from retrospective adjustment to the EC budget for the UK meant an initial payment of £0.4 billion was made to the EC in July.

In his 'summer budget' speech he gave on July 8, Chancellor George Osborne said the government planned to reduce public sector net borrowing to £69.5 billion in the current fiscal year. The reduction should then continue further to £43.1 billion in fiscal year 2016-17; £23.3 billion in 2017-18, until it reaches £6.4 billion in fiscal year to April 2019.

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theNews
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#612

UK retail sales growth unexpectedly quickens in August-CBI

British annual retail sales growth unexpectedly picked up pace this month, a survey by the Confederation of British Industry said on Wednesday.

The CBI distributive trades survey's retail sales balance rose in August to +24 from +21 in July and above economists' forecasts of +18.

Sales expectations for September were +35, up from +13 in August.

Official figures released this month showed British retail sales rose by less than expected in July, hit by a fall in the sales of auto fuels.

The Bank of England has said it is increasingly looking at domestic pressures as it gages when to raise interest rates, at a time when a rising sterling and falling oil prices, exacerbated by turmoil in China, are keeping British price pressures in check.

source

theNews
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#613

GBP/USD: Sterling Consolidates Higher, Supported by Oil Rebound

The UK's pound added small gains on Thursday after the opening bell, consolidating somewhat after the US dollar rallied and sent cable below $1.55 in the previous session. The rebound in commodity prices, notably oil, provides some support to sterling.

Sterling added 0.19% to $1.5487, recovering somewhat after it fell from $1.57192 to $1.54517 in the previous session.

Crude oil prices' stabilization continues, rebounding from Monday's steep losses, although US crude futures still trade below $40 per barrel.

The US dollar strengthened across the board, following upbeat US durable goods orders for July, pointing to a solid start for business investment in Q3, supporting the US dollar.

New York Federal Reserve President William Dudley stated on Wednesday that recent developments made the case for a September hike "less compelling" than a few weeks ago.

"Certainly Dudley’s comments show that US policymakers have serious concerns about events in China and the potential ripple out effects, with some notable names calling for extra stimulus in the form of extra QE, Larry Summers, being one such advocate, which does seem somewhat of an overreaction," Michael Hewson from CMC Markets wrote on Thursday.

US data later today will remain in focus with the latest revision to Q2 GDP expected to be revised slightly higher as a result of recent upward revisions to June data, including yesterday’s durable goods. An upward revision to 3.2% from 2.3% is expected with most of that coming from the services sector. Personal consumption is also expected to nudge higher to 3.1%.

Sterling will remain sensitive to the Chinese stock performance as it influences commodity prices, which affects the UK's mining and energy sector in a big way.

Chinese stocks calmed somewhat on Wednesday and managed to finish higher on Thursday. China's benchmark Shanghai Composite rose 5% after heavy losses seen on Monday and Tuesday.

source

theNews
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#614

UK GDP: Economy Keeps Pace Helped by Stronger Trade, Services

The UK economy grew at the rate of 0.7% between the first and second quarters, and rose 2.6% on a yearly basis. This was the tenth consecutive quarter of positive growth, the Office for National Statistics (ONS) informed on Friday.

GDP per head slipped 0.1% below the pre-crisis peak during the second quarter, while the overall economic growth already exceeded the level of its pre-downturn peak in the third quarter of 2013, and was 5.2% above that peak in the second quarter of this year.

Growth in the second quarter was primarily driven by a robust services sector, rising 0.7% and contributing to quarterly growth with 0.6 percentage points. Output in industry was revised down to 0.7%, with the manufacturing sector suffering a decline of 0.3%. The construction sector saw a healthy bounce-back as the output was revised up to 0.2%.

On the expenditure side, the largest upward pressure came surprisingly from net trade, which contributed to overall growth with 1%, the strongest since the first quarter of 2011. This rather strong upward push from the trade sector stems from rising exports during the second quarter, up 3.9%, while imports slowed to a rise of just 0.6%. The ONS's Katherine Kent said the main drivers were a rise in the exports of chemicals to the USA and the export of fuels.

Household consumption unexpectedly decelerated to a rise of 0.7% during the second quarter.

Business investment above estimates in Q2

In a separate release, the ONS said business investment was up by 2.9% in the second quarter compared with the previous quarter, driven by machinery equipment and intellectual property products. These drivers were partially offset by a fall in other buildings and structures. Data also showed that compared with the second quarter of 2014, business investment was up 5%, which is the lowest rise in two years.

The ONS figures also showed the Index of Services, which accounts for 78.4% of GDP, rose above estimates between May and June by 0.5% with increases in all main components; the highest being in transport, storage and communications which rose 1% when compared with April to May. On a quarter-on-quarter basis services rose 0.7%, unrevised from the previous estimate.

Outlook steady

In its latest economic forecast, released on Monday, the Confederation of British Industry (CBI) increased its GDP growth prediction for 2015 from 2.4% to 2.6% based on positive signs of rising productivity and the pace of wage growth.

John Cridland, CBI director general, said: "We’re encouraged by the twin engined-growth of household spending, spurred by stronger wage increases and low inflation, buttressed by business investment … We’re also seeing tentative signs of productivity picking up.

"But the outlook on exports is somewhat muted: the strong pound is hampering our competitiveness abroad and growth in the euro zone, our biggest trading partner, will remain subdued for the foreseeable future, particularly given renewed uncertainty."

source

theNews
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#615

GBP/USD forecast for the week of August 31, 2015

The GBP/USD pair initially tried to rally during the course of the week, testing the 1.58 level. This is an area that has been resistive in the past, and then as a result the sellers of course were attracted to it. Because of that, we not only fell but fell hard. We ended up crashing through the 1.54 level during the course of the week, and more importantly through the bottom of the uptrend line that had been supporting this market for some time now. With this in mind, we believe that the volatility is about to increase in this marketplace, and you will have to trade it off of shorter-term charts.