British Pound on Monday 30 Sept: GBP forecasted to extend gains vs Euro, money supply data released today, AUD on the back foot
The British Pound Sterling (Currency:GBP) has made a strong advance in its bid to take out 1.2 against the Euro over the course of the past 24 hours of currency trading with analysts forecasting more gains to come. Today we watch out for money supply data while the rest of the week will be dominated by PMI releases.
Latest exchange rates:
- The pound euro exchange rate is 0.18 pct higher at 1.1957.
- The pound dollar exchange rate is 0.27 pct higher at 1.6182.
- The pound Australian dollar exchange rate is 0.01 pct lower at 1.7328.
- The pound New Zealand dollar rate is 0.23 pct lower at 1.9456.
16:40: Manufacturing PMI dominates Tuesday's outlook
A new month dawns on Tuesday and sterling has some solid data that has the potential to really shift the currency.
The Manufacturing Purchasing Managers Index (PMI) is released by both the Chartered Institute of Purchasing & Supply and the Markit Economics tomorrow at 09:28.
Analysts are predicting a reading of 57.3, a slight improvement on last month's 57.2. A figure either side will move sterling.
Lower = GBP-negative.
Higher = GBP-positive.
15:22: Safe-haven flows benefitting sterling
Further confirmation of the safe-haven function currently being enjoyed by GBP.
Omer Esiner at Commonwealth Foreign Exchange says:
"The British pound rose to a nine-month trade weighted high over the weekend as America and Italy’s battle for the title of most dysfunctional government in the industrialised world benefited sterling. The safe-haven flows out of the euro and the dollar added to the pound’s already upbeat tone."
14:45: Markets wary of US debt negotiation failure, situation seen as GBP supportive
The safe-haven qualities espoused in sterling are seeing the UK currency buoyed by the ongoing problems surrounding the US debt negotiations.
The next 24 hours are key. Max Cohen at Spreadex says:
"With Republicans and Democrats failing to make concessions over the weekend, the budget debate has been the subject of intense scrutiny by economists and investors alike.
"With Senate convening at 19:00 BST, U.S lawmakers will have until mid-night local time to approve emergency legislation to keep the federal government operating from tomorrow, the beginning of the 2014 fiscal year. Whilst essential operations would continue, some 800,000 government jobs are at risk of being placed on temporary unpaid leave."
13:48: More speculators are now positive on GBP than are negative as safe have status brings appeal
Lloyds Bank Commercial Banking comment on the revelation that more speculators are now betting on GBP gains:
"Net non-commercial GBP positions turned net long in the week to September 24th for the first time since February. Nevertheless, positioning is only marginally net long, so there is still plenty of scope for gains should the current negative sentiment towards the USD continue.
"Upside for GBP is to some extent limited by the scope for EUR gains, but simultaneous problems in the US and the Eurozone also highlight the status of GBP as a safe haven, and our proprietary data also highlight that non-commercial accounts are tentatively taking long GBP positions for the first time this year."
Data from the major US futures & options exchanges (CFTC) are released each Friday evening and report positions up to the close of business on the previous Tuesday. Traders are classified as either commercial or non-commercial. The positioning of the non-commercial traders can be used as a proxy for the speculative side of the market.
12:20: Help-to-buy mortgage scheme no threat to UK economy says RBS
RBS, one of the big names that will be lending as part of the UK's help-to-buy mortgage lending scheme says the UK is not at risk of a housing bubble.
RBS say:
"The reawakening of the housing market in the UK might be pushing prices higher, but it isn't yet a threat to the financial system. That's the view of the Bank of England’s Financial Policy Committee (FPC), whose job it is to spot risks that threaten UK financial stability.
"Despite the recent rise in prices, and around 10%y/y rises in London, the FPC pointed to the low cost of servicing debt as a reason for price rises not to cause alarm. To try to ensure calm, the Chancellor has asked the committee to review the Help to Buy Scheme every September."
10:03: GBP advances vs US Dollar
It would seem GBP/USD has decided today's money supply data is positive. The rate has advanced, read our full report on GBP/USD here.
09:26: Mortgage approvals beat expectations
Mixed data on the money supply front.
More money has been made available to the housing sector it has been shown.
The Mortgage Approvals released by the Bank of England came in at 62.226K, well above forecasts for 61.350K.
However, UK Net Lending to Individuals has actually fallen. Monthly lending figures show 1BN GBP of fresh credit was made last month, analysts had forecast 1.6BN.
Elsewhere, M4 Money supply came in at an expected +0.7%.
08:40: Forecasting more downside for the Euro
Gareth Berry at UBS gives his forecasts for the euro pound exchange rate:
"With the trending and momentum tools pointing lower, the risk is for more
downside. Support is at 0.8285 ahead of 0.8160. Resistance is at 0.8471."
Turning the equation around (GBP/EUR): Resistance is at 1.207 ahead of 1.225, support at 1.18.
08:30: Today's money supply data
The more important market-moving data points ahead at 09:30.
M4 Money Supply (MoM) (Aug): Consensus = 0.7%, last month 0.6%.
Mortgage Approvals (Aug): Consensus = 61.350K, last month = 60.624K.
08:25: Sterling in fresh gains vs Aus dollar
Sean Lee at FXWW on the Sterling vs Aussie: "GBP/AUD has accelerated higher and the next target is trend highs at 1.7480."
The Aus dollar is struggling as traders turn coy ahead of this week's Reserve Bank of Australia board meeting - will interest rates be cut?
Michael Pascoe at Business Week considers the possibilities of a rate cut:
08:22: Weekly FX forecasts
British Pound Sterling (Currency:GBP) could take out new highs vs USD if UK data continues to outperform. Yearly highs for the euro. Volatility predicted to pick up: The weekly technical outlook from Boris Schlossberg at BK Asset Management:
08:17: Today - Money supply data, later this week - PMI's
"Domestically we expect to see ongoing signs of robust broad money growth and a further improvement in mortgage activity. We forecast ‘core’ broad money accelerating to a 5% annualised rate. Mortgage approvals are likely to rise again and reach the highest since February 2008. The rest of the week will focus on September’s PMIs and the outlook for Q3 GDP." Lloyds Bank on the UK data points to look out for today and this week.
For a full break down of expectations concerning the important PMI releases, see our Friday afternoon entry.