Archive for the ‘GBP’ Category

The pound continued its downwards run on the US Dollar in this week’s forex trading, largely thanks to the release of mediocre Construction PMIs for December 2016. The PMIs measure activity and investment in the sector and are a key indicator of future economic growth.

The news comes as markets nervously await the triggering of Article 50, the device that formally begins Britain’s exit from the European Union. The risk of a second Scottish independence referendum is further devaluing Sterling, with Scottish First Minister Nicola Sturgeon appearing increasingly committed to separation from the UK.
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Sterling slipped to a five-week low against the euro on Monday (September 26), as lingering worries over the economic impact of Britain’s impending exit from the European Union weighed on the currency.

The pound also traded close to a five-week low against the dollar at $1.2985, leaving it less than two cents away from the three-decade low below $1.28 it plumbed in the wake of June’s Brexit vote.

After hitting that low in July, sterling gained 5 percent versus the dollar by early September, as data showed the post-referendum economy holding up better than had been feared. But with parliament back from its summer recess, Brexit worries have come back into investors’ radar and have dampened appetite for the currency.

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Sterling steadied on Monday (September 12) after its first week of losses in four, with traders debating whether the currency had topped out for the moment as they awaited a speech by U.S. Federal Reserve board member Lael Brainard.

The pound dipped last week against the dollar and euro but has broadly done well in the past month as a handful of economic indicators suggested the UK economy was holding up better than expected after June’s vote to leave the European Union.

It was up roughly 0.3 percent at $1.3304 and 84.37 pence per euro by 3.30pm on Monday (September 12).

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Sterling traded close to a three-week high against the dollar on Thursday (August 25) and was on track for its best week in six, with worries over the economic impact of Britain’s vote to leave the European Union easing a little after recent better-than-expected data.

The pound was also on track for its best week in six weeks against the euro, having hit a two-week high against the single currency on Wednesday (August 24).

Short positions on sterling had reached a record high of 94,238 contracts in the week to August 16, and traders said many speculators had this week been unwinding bets and booking profits, which had helped lift the currency.

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Speculators that are the most bearish on sterling in nearly 25 years may be vindicated by a report published on Monday (August 1) showing Brexit is probably hitting Britain harder than markets previously envisaged.

Sterling declined versus most of its 16 major peers as the data showed UK manufacturing shrank more than initially forecast in July.

Hedge funds and other large speculators ran the biggest net short positions, or bets on the currency’s decline, since records began amid speculation that the Bank of England will cut interest rates for the first time in more than seven years on Thursday, August 4 to head off the risk of recession.

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The pound fell even as a report showed the UK’s annual inflation rate rose more in June than economists forecast.

Sterling weakened versus most of its 16 major peers. UK consumer prices climbed 0.5 per cent last month from a year earlier, the Office for National Statistics said in London. Analysts had expected the rate to rise to 0.4 per cent, from 0.3 per cent in May, according to the median estimate in a survey by news agency Bloomberg. The Bank of England’s 2 per cent inflation target was last reached in December 2013.

The Bank of England signalled last week it is readying stimulus for August as the economy reels from Britain’s decision to quit the European Union. Minutes of the BOE’s July meeting showed most members of the Monetary Policy Committee expect policy to be loosened next month.

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Sterling was firmer on Wednesday (July 13), trading near a two-week high against the euro as Theresa May was set to take over as Britain’s prime minister, easing some of the political uncertainty that has dogged the currency in the past few weeks.

Traders will keep an eye on who will be appointed as finance minister with many awaiting for clarity on the new prime minister’s detailed thinking on triggering Article 50, the procedure for exiting the European Union.

May has said “Brexit means Brexit”, but added Britain will not rush to trigger the formal divorce proceedings. The uncertainty over whether Britain will be able to retain access to the single market after exiting the EU, along with expectations that the Bank of England could cut rates on Thursday (July 14), are likely to make traders wary of sterling.

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The pound tumbled to a new 31-year low on Wednesday (July 6), at one point dipping below $1.28, on fears over the effect of last month’s Brexit vote on Britain’s property market and the prospect of cuts in Bank of England interest rates.

The pound, one of the main vehicles through which financial markets can express concern about Britain’s decision to leave the European Union, fell as low as $1.2798 in Asian trading, its lowest since June 1985. It recovered to about $1.2891 in afternoon trading in London.

That still left it more than 13 per cent weaker than it was before the June 23 referendum, and about 1 per cent lower on the day.

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Prime Minister David Cameron has said Thursday’s (June 23) referendum on Britain’s membership of the European Union was likely to be very close but he also predicted a “remain dividend” in investments if Britons voted to stay in the 28-nation bloc.

With just two days to go until the referendum that will shape the future of Europe, opinion polls have indicated that British public opinion is so divided that the outcome is too close to call.

Meanwhile, Swiss investment bank UBS warned its clients on Tuesday (June 21) it may fail to execute some orders on its electronic trading platform should this week’s Brexit referendum affect liquidity or cause extreme volatility.

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With the Brexit vote taking place in less than 48 hours, many Forex online traders (Foreign Exchange Market) are sweating at their palms. Numerous, who are trading, had said that the markets were looking incredibly risky. Investors have been closely been following the vote. The vote will take place on Thursday. According to recent polls, the vote is set to be substantially close.
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With sterling trades seen too expensive, the yen and Swiss franc are in demand according to in-depth research by news agency Bloomberg.

The UK’s referendum on European Union membership is spurring volatility in the pound, making trading sterling increasingly expensive. Banks are pointing clients toward alternative currency bets or hedges that could fare well regardless of the outcome.

Here is a list of analysts’ favourite trades as written in research notes or recommended in interviews conducted by Bloomberg News in recent days.

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The pound rallied the most in three weeks after a poll of UK voters released on Monday showed people who support a campaign to remain in the European Union exceeded those saying they will vote to leave by a wider margin than last month.

Sterling rose against most of its 16 major peers after the ORB/Telegraph poll showed 55 percent of respondents were in favour of remaining in the European Union, while 40 percent wanted to leave.

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Financial researchers have indicated that trading across all G10 currencies is similar to the type of trading conducted throughout recession periods. The G10 currencies are the most widely traded globally, these are:

Sluggish Days for the Pound?

The British pound has seen modest gains over the past few trading sessions and is now slightly above the 1.51 figure in relation to the United States dollar. However, this is now without mixed results.

Recent bank stress tests pointed out that all but two institutions (Standard Chartered and RBS) have passed scrutiny and did not exhibit any symptoms of capital shortfalls. This was unfortunately offset by surprisingly sluggish PMI data.
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Fears over a hung parliament at the upcoming UK General Election, to be held on 7 May 2015, helped to weaken the British Pound at the end of last week and experts are now warning that the currency is unlikely to recover until all uncertainty is removed and a new government has been successfully formed.

Sterling slumped as low as $1.4618 on the morning of 10th April, marking a five-year low against the US Dollar and its lowest level since the uneasy days that followed the 2010 General Election.

Despite a very slight recovery to $1.4637 by the end of the week’s trading, pre-election nerves are expected to continue to affect currency traders.
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Two encouraging pieces of news emerged from the UK economy on Tuesday, both of which are likely to give the British Pound a boost in the currency markets and will be of keen interest to anyone involved in online Forex trading.

Stronger Growth Than Expected

The first of these was the announcement from the CBI that the British economy expanded at a faster rate in the past quarter than it did in the quarter before that.
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The brokering of a ceasefire between Russia and Ukraine has finally brought stability to Forex trading markets in the last week, particularly in the Eurozone.

The conflict has significantly slowed the recovery in central Europe, with Germany’s finance minister Wolfgang Schäuble recently announcing that the growth forecast for the country may not attain its predicted target of 1.8 per cent.

This is to be expected in a country only 400 miles from the conflict; fighting has affected business confidence in the powerhouse economy of Europe, and this has had a negative knock-on effect on the price of the Euro.

However, the tenuous peace deal between Russian rebels and the Ukrainian government has helped the Euro advance against the Dollar faster than all other currencies; from previous lows to a price of $1.311565.
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The two days gains shown by the Pound have been halted, as figures show that mortgage approval rates dipped to their lowest rate in nine months during April.

The approval rate dropped as a result of the tightening of lending rules used by the banks.

Banks have been tightening the rules that they apply to mortgage lenders for several months.

In April, new rules demand that borrowers show they will be able to afford repayments even if the interest rate rises.

While the decline in mortgages has hit the Pound’s ascent, it may have helped to quell fears surrounding the property market.

Officials were set to meet to discuss what actions, if any, needed to be taken to prevent the property growth from becoming more of a problem.
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A consensus of almost fifty economic experts predicts that Britain will show a growth rate that exceeds the rest of the G7 nations in the coming quarters, but the Bank of England is in no rush to increase interest rates, which might slow the rate of recovery.

The poll agrees with online Forex trading positions that the Bank of England will hold interest rates until the second quarter of 2015, raising them then by 25 base points, with a further increase of the same magnitude in the third quarter.
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One of the major headlines in this week’s latest roundup of online Forex trading news revolves around a significant drop in the volatility index.

This is in stark contrast to recent weeks when this very same index hinted at a rather volatile Forex market.

Thus, many online trading analysts believe that there is little reason to expect major currency movements from a short-term perspective.
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