Double Whammy of Manufacturing PMI and a Silent Bank of England MPC

Today the British Pound Sterling (Currency:GBP) outlook is dominated by Manufacturing PMI at 9AM, we then hear from the Bank of England MPC - will the Bank awe markets with an unexpected decision on interest rates or monetary stimulus?

Highlights:

@8:13: Carney urged to talk sterling lower
@9:30: Strong PMI reading boosts GBP
@12:03: Fresh advances for sterling as BoE decision comes and goes without incident

17:42: GBP broadly higher versus the majors

• The Pound to Euro exchange rate is 0.17 pct higher at 1.1453.
• The Pound to US dollar exchange rate is 0.46 pct lower at 1.5137.
• The Pound to Australian dollar exchange rate is 0.17 pct higher at 1.6961.
• The Pound to Japanese Yen is 0.92 pct higher at 15023.
  PS: The above are spot market quotes to which your bank will charge a discretionary spread when passing on their retail rate thus cutting into the currency delivered. However, an independent provider will guarantee to undercut your bank's offer, thus delivering more FX. Please Learn More.
  
  

17:35: Friday and Construction PMI

Friday brings some more interesting data. Can it top today's massive beat on the Manufacturing PMI? (See 9:30).

Consensus estimates are for 51.6, up from last month's 51.

Be aware that traders will be expecting a little more than the above quote which will have been garnered before today Manufacturing PMI beat.

Thus, for sterling to receive a boost we would want something close to 52.

15:06: Outlook for Pound versus US dollar

Latest technical setup for GBP/USD from Forex.com:

"Bias lower below 1.5215 55hr Moving Average towards 1.5180 21hr initially ahead of 1.5125 lows next, above may see 1.5255 & then 1.5285 100hr next."

15:02: Technical outlook for EUR/GBP

Today has seen fortunes swing back into favour for the British Pound.

Kathleen Brooks at Forex.com comments on the outlook for the Euro / Pound exchange rate:

"Today’s BOE decision is mildly GBP bullish in the short term, 1.5295 – the 50-day moving average – is key resistance for GBPUSD. This could act as a take profit zone ahead of the Inflation Report, as we think that the market will be reluctant to get too long of GBP ahead of next week’s event risks.

"EURGBP fell below 0.8700, as we expected, 0.8660 – the 200-hour moving average, may act as short term support."

12:55: ECB leaves rates unchanged - press conference due

ECB leaves rates unchanged at 0.5%, no change to deposit rates, all eyes now on the press conference at 1330 BST. GBP-EUR now 0.6 pct in the blue at 1.1505.

12:47: Why sterling was boosted following the Bank of England MPC decision

Ross Walker at RBS explains why sterling has benefited from today's Bank of England event:

"The main 'news' in August is the absence of a policy statement by the MPC. This is significant in so far as it indicates that the MPC is broadly content with market expectations for Bank Rate in stark contrast to the previous meeting on July 4th where the Committee's statement noted that: 'the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy' (triggering a c.25bp drop in short-term market rates)."

12:03: Further boost for GBP as BoE decision announced

BoE leaves base rate unchanged at 0.5%, no additional stimulus measures and no comment from BoE.

"GBP jumps on the back of the BOE unchanged decisions and no statement from the BOE, as we expected. GBPUSD through 1.5220 resistance," say Forex.com

"New Daily Low: EUR/GBP breaks new daily low at 0.8691, previous rate 0.8694," say EasyForex pointing out sterling is making some welcome advances against the shared currency.

"Inflation Report (next Wednesday) going to be a ripper," say WorldFirst referring to the next major hurdle for GBP.

10:25: A 'sterling' recovery for the British Pound

The GBP has hogged the limelight on global FX markets on Thursday following on from a strong data release (See @9:30).

The latest spot wholesale rates show that the majority of gains have come against the euro:

• The Pound / Euro exchange rate (GBP/EUR) is 0.46 pct higher at 1.1485. (Latest GBP/EUR update now live).
• The Pound / US dollar exchange rate (GBP/USD) is 0.08 pct higher at 1.5217. (note: USD is another winner today).
• The Pound / Australian dollar rate (GBP/AUD) is 0.07 pct higher at 1.6948. (Good Chinese PMI numbers have assisted AUD).

PS: The above are spot market quotes to which your bank will charge a discretionary spread when passing on their retail rate thus cutting into the currency delivered. However, an independent provider will guarantee to undercut your bank's offer, thus delivering more FX. Please Learn More.

9:30 UK Manufacturing PMI = 54.6 vs 52.8 expected

Massive beat.

Sterling recovery underway.

9:14: Euro weakness not feeding into GBP/EUR

The EUR is soft after it was announced that Euro-Area July Manufacturing PMI 50.3 vs Initial Estimate of 50.1.

However, no impact on GBP/EUR ahead of the two big news events ahead. (See below).

8:35: Outlook for sterling dominated by Manufacturing PMI, Bank of England MPC decision

The beginning of a fresh month means one thing - currency market excitement.

We kick off proceedings with the release of Manufacturing PMI at 9:30. Currency watchers should look out for a release either side of consensus forecasts of 52.8. A positive beat should boost sterling.

Then at 12:00 the Bank announce their interest rate and monetary stimulus decision. No changes are expected, thus should anything be announced expect heightened volatility.

8:30: GBP being sold-off

The British pound sterling (Currency:GBP) has seen a week start to Thursday's trade:

• The British Pound to Euro exchange rate is 0.1 pct higher at 1.1444.
• The Pound to US dollar exchange rate is 0.35 pct in the red at 1.5155.
• The Pound Sterling to Australian dollar forex rate is 0.16 pct lower at 1.6907.
• The Pound to New Zealand dollar is 0.11 pct lower at 1.9030.

PS: The above are spot market quotes to which your bank will charge a discretionary spread when passing on their retail rate thus cutting into the currency delivered. However, an independent provider will guarantee to undercut your bank's offer, thus delivering more FX. Please Learn More.

8:13: Carney and taming a stubborn British currency

A timely note from Geoffrey Yu and Gareth Berry, FX Strategists at UBS, on the issue of Carney, interest rates and a stubborn sterling:

"(Carney's) July warnings that over-optimistic expectations had an even greater impact on the shortend, sterling barely moved.

"This suggests that unlike EONIA and EURUSD, subtle rate shifts are not enough, underscoring the view that GBPUSD possesses drivers exogenous to UK monetary policy, such as secular capital inflows.

"As such, to maximise its ‘stimulus’ effect (especially after the forward guidance launch), retaining rate warnings but adding a word or two on the expectation that such policies should also tame a stubborn currency might be worth entertaining as well."