British Pound Sterling Live on Monday the 16th: GBP outlook dominated by BoE minutes, CPI/PPI, employment data

The British pound will be hoping to cement those gains seen towards the back of last week; however we have a busy week for GBP with the minutes from July's Bank of England MPC meeting dominating the outlook.

16:30: The agenda for sterling on Tuesday is driven by inflation data

A busy day data wise for GBP on Tuesday the 16th. We highlight the most important releases for GBP:

@ 9:30: Core Consumer Price Index (YoY) (Jun). Consensus is for a reading of 2.3 pct. Anything higher is GBP-positive
@ 9:30: Consumer Price Index (YoY) (Jun). Consensus is for 3 pct. Again, anything above is likely to be good for sterling.
@ 9:30: Producer Price Index - Output (YoY) n.s.a (Jun). Expectations are for 1.9 pct. We would need a big surprise here to shift GBP.

15:14: GBP-USD declines may cease… for now

Interesting forecast note from RBS this afternoon. In their Sterling Strategy Weekly note to clients analyst Melinda Burgess says:
"Strategically we still expect further USD gains this year, but the market may be reluctant to re-establish positions ahead of Bernanke's semi-annual Humphrey-Hawkins testimony on 18 July. So while we see GBP/USD trading around 1.45-1.50 this year, risks may be skewed to the upside in the near term."

14:00: Latest GBP rates

The pound / euro exchange rate is 0.12 pct higher at 1.1576.
The pound / US dollar exchange rate is 0.03 pct lower at 1.5105.
The pound / Australian dollar rate is 0.4 pct in the red at 1.6632.
The pound / Canadian dollar rate is 0.02 pct higher at 1.5715.

Please be aware that the above quotes are taken from the wholesale spot markets, your bank will affix their own discretionary spread to the figures. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here.

12:00: First time buyer in London? You could really use a stronger British pound!

Today comes with news that London house prices continue to get further out of reach of first time buyers.

No doubt, foreign buyers are to blame. It would seem that the key to scaling back this inflationary pressure would be for sterling to price them out of the market.

According to LCP Limited while Londoners see the cost of property rise out of reach, foreigners continue to pick up property at a discount:

"Investors from South East Asia, who comprise the largest proportion of LCP’s buyers at 40%, have profited the most from a weakening sterling.

"For buyers in Hong Kong and Singapore, currency adjusted property prices have actually fallen, dropping by 10% and 12% respectively since their 2007 high. In Malaysia, where the Ringgit has strengthened significantly over the last six years, the price drop was also 10% and in Thailand, prices saw a marginal growth of 3% over the same period.

"Investors from the Middle East, where the currency is pegged to the US dollar, have also felt the benefit of sterling’s decline. When exchange rates are taken into account, prices for these buyers’ stand just 6% higher than the peak of the market prior to the credit crunch."

11:50: Is this the real reason for the UK's deficit?

The gini coefficient for the UK, used to calculate inequality, declined a little between tax years 2011 and 2012.

A number of forces are at play, including: a small fall in income of the top 10%; an increased tax-free allowance; and more tax credits.

Andrew McLaughlin, Chief Economist at RBS, makes a very interesting observation:

"A little known, but significant change in the past decade has been a shift in middle income households from being net contributors to public finances, to net beneficiaries. In 2001, the middle paid c53% of their income in taxes and received c30% in benefits. In 2012, they paid c38% of income in taxes, but received 42% in benefits. Is this an alternative explanation of the UK's deficit?"

11:33: The 2013 currency scorecard!

The best and worst performing currencies of 2013 have been identified by Greg Gibbs at RBS:

"Out of a set of 32 currencies, the AUD is the second worst performer this year (-12.7%) above the ZAR (-15.0%), below the JPY (-12.6). 4th last on the list is another bulk commodity exporter – Brazil (-9.5).

"At the top of the list is the ILS (Israeli Shekel) +3.7%, 2nd is the CNY (+1.5%), 3rd is the MXP (+0.3), 4th is the USD (0%).

"EUR is 7th (-1.0%), SGD 12th (-3.3%), CHF 13th (-3.3%, CAD 16th (-4.6%), KRW 18th (-5.3%), NZD 19th (-6.0%), GBP 22nd (-7.1%)."

11:14: Investors turn more bearish on the pound

Lloyds Bank Research tell us speculative investors have turned more bearish on sterling:

Both EUR and GBP short positions rose following the announcement of monetary policy forward guidance by their respective central banks.
Although the rise in GBP short positions was relatively muted despite the 3% decline in GBP/USD seen post-MPC announcement. This suggests shorter-term speculative investors may have preferred to hold back perhaps until more is known about Carney’s intentions on monetary policy.

Data from the major US futures & options exchanges (CFTC) is used as an indication on how speculative traders are positioned on global currencies.

10:44: Euro tipped to enjoy advantage against the pound

Luc Luyet at MIG Bank has consulted the EUR-GBP charts to try and ascertain where this pair is headed.

It would seem the euro is likely to maintain the upper hand from here:

"EUR/GBP is moving above its resistance at 0.8637 (17/04/2013 high) but struggles to hold above it, indicating a very volatile price action.
Given the recent new highs, a short-term bullish bias is favoured as long as the hourly support at 0.8575 (10/07/2013 low) holds.

"An hourly resistance can be found at 0.8694 (11/07/2013 high). Another resistance is at 0.8794 (12/03/2013 high)."

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10:06: BRC Retail Sales data paints a sunny picture

Retail sales in the UK were helped by the warmer weather in June (2013), rising by 1.4 pct, according to new figures by the British Retail Consortium.

The high street has received the biggest boost as shoppers return to traditional shopping sites with sales on the high street up by 1.4 pct in June, compared to a 0.6 pct increase in sales at out of town retail parks.

By contrast, sales in shopping centres were down by 3.0 pct. Overall there was a 0.1 pct increase in footfall across all shopping sites compared to June 2012.

This is important as we face official retail sales data on Thursday morning.

Barclays say:

"Core retail sales are expected to rise modestly by 0.2% from the sharp increase of 2.1% in May. We expect a flat print of 0.0%."

9:20: Hefty losses versus South African Rand and Australian dollar

The big news on the currency markets this morning are those concerning commodity currencies which have been boosted by Chinese Q2 data released over the weekend.

Updates on pound versus the South African Rand here and versus the Australian dollar here.

8:25: GBP holds recent gains

The British pound sterling (Currency:GBP) is flat against the EUR and USD today following on from a strong close to last week.

The pound to euro exchange rate is 0.07 pct up on Friday's close at 1.1571.
The pound to US dollar exchange rate is flat at 1.5107.
The pound to Australian dollar is 0.6 pct in the red at 1.6599.

Please be aware that the above quotes are taken from the wholesale spot markets, your bank will affix their own discretionary spread to the figures. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here.

8:15: Busy week for sterling

Chris Walker at Barclays lays out the agenda for sterling in the week ahead:

"It is a fairly busy data week in the UK with CPI/PPI (Tues), labour market (Wed), retail sales (Thurs) and public finances data (Fri) due.

"We expect CPI to rise to 3.1% from 2.7% (cf 3.0%), while PPI data will be closely followed for any delayed pass through of currency weakness. Consensus estimates expect no change in the ILO u/e rate (7.8%), we expect the claimant count to decrease by 7.0k (cf 8.0k).

"Core retail sales are expected to rise modestly by 0.2% from the sharp increase of 2.1% in May. We expect a flat print of 0.0%."

8:10: Outlook for sterling dominated by BoE minutes

The BoE minutes (Wed) will be a key market event since the July meeting was the first for Governor Carney.

"We expect an unchanged vote split (Carney replacing King's vote for further asset purchases) but this is a close call and a 7-2 split is also a possibility. We will also look for any further hints of forward guidance, given it was hinted at in the policy statement," says Chris Walker at Barclays.