The British pound looks FinMin Summit for direction on FOMC minutes EU

7th July 2012 07:10 GMT fundamental outlook for British Pound: Neutral The British pound remains vulnerable to risk sentiment trends, GBPUSD show a firm correlation with the MSCI World Stock Index. In the aftermath of last week's disappointing U.S. jobs report and underwhelming stimulus efforts by the ECB and the BOE is hoping to make this the FOMC minutes from June's outing amidst that the Fed bring relief. Although Ben Bernanke and company decided to introduce no QE3 last month, dealers are keen to assess the extent to which such an option entered into conversation, expectations for a possible expansion of the balance sheet, revealed in the coming months will lead to. All in all, the utility seems to be of another QE program highly suspect. In fact, with U.S. Treasury yields already so low that after adjusting for inflation, real interest rates are negative, the 10-year maturity, it seems unlikely that a further push much lower borrowing not to stimulate. The Fed is certainly not blind to the limits of further QE, but it is equally sensitive to the fact that trigger a strong signal to financial markets may appeal to pandemonium. This means that the door open for further easing is likely to be retained, at least rhetorically. In this sense, language increases the likelihood that additional accommodation is expected to increase the perceived risk, and with him the pound. Needless to say, the reverse scenario is also the case. In addition to investors yearning for looser monetary conditions, the debt crisis is set to the euro zone to return to the top, as the currency of Finance issued for a meeting convened on Monday. The sit-down is expected that civil servants, the implementation of June to begin to see the EU summit. Although little longer-term issues such as joint bank governance and expanding the EFSF / ESM bailout funds forces should be reached, the Spanish bank bail out prominently in the proceedings. Information about the efforts are likely to be ratified at the seat. The British pound continues to be a beneficiary of the regional port flows in times of growing concern over the euro zone, which means that as a result of disappointing investors, the UK currency may increase. DailyFX provides forex news and technical analysis on trends affecting the global currency markets.

The British Pound Outlook depends on the BoE in Paris for more relaxing

30 June 2012 analyst 02: 49 GMT
fundamental forecasts for the pound sterling: Rally
The pound sterling has reduced the decline of this month that the EU Summit survived the reactions of the market, but the sterling may struggle to hold his ground next week as the market players see the Bank of England is taking additional steps to protect the UK economy. While the BoE is widely expected to maintain the reference to 0.50% interest rate, there is growing speculation that the Central Bank embark in more quantitative expansion as the sovereign debt crisis continues to hinder the fundamental Outlook for the region.
A Bloomberg News poll shows 39 of 41 surveyed economists see the monetary policy Committee increase the ease of purchase far beyond the target of 325 GBP, and the Central Bank can continue to do its cycle of relaxation in the second half of the year Governor Mervyn King is cautious over more to the region. Indeed, Mr King sounded pessimistic on the economy of his testimony before the Council of the Treasury Committee, earlier this week, and it seems that the head of the Central Bank attempts to of swaying the MPC to expand the balance sheet more far to combat the risk of loss to the U.K. economy. The United Kingdom is in a technical recession, fears of a prolonged economic slowdown may push additional votes for ease, but we see an another 5-4 split in July as the underlying growth of price stickiness raises the threat of inflation. Although the BoE curbed its forecasts for growth and inflation, we have seen the superior price containing consumer heart tick in may, with annualized sales growth of 2.2%, and the majority can continue to approve an approach to wait and see the fundamental Outlook for Britain remain confused with great uncertainty.
Although the GBPUSD had an impressive rally in July, the couple seems to have carved a high low in June, and the lack of dynamism of stand on the tracing of Fibonacci 61.8% of 2009 low to high around 1.5690 - 1.5700 can produce a correction in the short term before the decision of BoE rate as market participants weigh prospects for monetary policy. However, a program for the purchase of the assets of the BoE increase could force a sharp decline in the exchange rate, and we see the GBPUSD allow execution of the other 50.0% Fib (1.5270) should the Central Bank strike a tone very moderate for the area. -DS
DailyFX provides news forex and technical analysis on trends affecting the global currency.
Learn forex trading with a free account for practice and exchange of FXCM charts.
30 June 2012 02: 49 GMT

£ British Pound Outlook Calls for Mixed Performance vs. Top Currencies

26 May 2012 04:12 GMT

Fundamental Forecast for British Pound: Neutral
Sizing up risk appetite trends, the British Pound appears likely to yield a mixed performance in the week ahead, with gains likely against the safe-haven set of currencies while losses are sustained against the Euro and the overtly sentiment-linked commodity dollars (particularly the Aussie and the Kiwi). Rapidly eroding Bank of England policy expectations may undermine the select pockets of Sterling strength however.
The EU leaders’ summit ended with policymakers putting the fate of Greece firmly in the country’s own hands, meaning little is likely to change on this front until repeat elections are held in mid-June. Meanwhile, the latest batch of dismal PMI readings from China and the Eurozone reinforced the threat that both economies post to global growth but offered nothing that was thematically unfamiliar for investors. This hints that the supply of near-term negativity that can conceivably unhinge markets is running dry, opening the door for profit-taking to spark a correction in recent trends.
For the British Pound, this amounts to a rebound against established safe havens like the US Dollar and Japanese Yen and pullback against the Euro where the UK unit served as a regional refuge to capital feeing the uncertainty tainting the single currency. Losses also appear likely against high-yielders like the Australian and New Zealand Dollars, where the Pound is the lesser “risky” currency and so finds itself at a disadvantage amid a broad-based recovery in sentiment.
On the domestic front, the focus is on Friday’s Manufacturing PMI print. Expectations call for the factory sector to shrink in May, marking the first contraction in five months. The result threatens to reinforce negative cues from April’s soft inflation reading as well as the downward revision of first-quarter GDP results and may put downward pressure on front-end yields along with Sterling as BOE rate expectations sink. Indeed, a Credit Suisse gauge of priced-in policy expectations for the coming year has dropped precipitously and now stands at the lowest in four months.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
26 May 2012 04:12 GMT

£ British economy decreased by more than initially estimated

THE TAKEAWAY: UK GDP for Q1 Revised Lower to - 0.3% from - 0.2%-> New pressures for BoE to raise stimulus-> Cable briefly drops
The UK economy shrank more in the first quarter than was initially estimated last month. Data released today corrected the drop in GDP from - 0.2% to - 0.3% when compared to the previous quarter. Year over year, the GDP for the quarter dropped - 0.1% instead of staying level as was first released by the Office for National Statistics.
Construction experienced the biggest slowdown during the quarter, dropping by - 4.8% compared to the Q4 of 2011.
Two straight quarters of economic slowdown means the UK has entered a technical double dip recession. While the Bank of England decided to keep their stimulus program unchanged in the May's meeting, the International Monetary Fund has called on the BoE to increase its bond purchasing program to stimulate growth in the struggling economy.


Cable took an initial drop towards today's two month low at 1.5637 following the weaker GDP, but the pair bounced back above yesterday's low soon after.

£ British Pound: BOE Inflation Report, Euro Zone Debt Crisis in Focus

12 May 2012 01: 14 GMT  Fundamental Forecast for British Pound: Bullish
Familiar themes persist for the British Pound in the week ahead, with prices relying on a precarious balance between the impact of Eurozone crisis fears and an outlook for Bank of England monetary policy that appears to be turning relatively hawkish. In the week ahead, both drivers will find ample triggers for volatility, but the path of least resistance appears to point toward a broadly supportive environment for the UK currency against most of its top counterparts.
On the monetary policy front, the focus will be on the updated BOE quarterly Inflation Report. The document served as the basis for last week's MPC decision to leave benchmark interest rates on hold as well as opt not to expand the score of the quantitative easing program. Since the BOE typically doesn't release a statement when no. changes to policy are made, the report will serve as the markets' leading guide on the central bank's thinking for the coming three months, and thereby carries heavy implications for the Pound.
Minutes from April's sit-down of the rate-setting committee showed it's theretofore most dovish voice - Adam Posen - withdrew his long-standing call for additional EQ amid concerns about sticky core inflation. If Mr. Posen believes that price growth concerns overshadow the UK economy's descent into a technical recession as the chief concern of policy, there is a good chance that other less-dovish members of the committee are likewise if not more perturbed. Confirmation of such a shift in tone is likely to prove supportive for Sterling, boosting front end yields and scattering dilution fears.
In the Eurozone, uncertainty persists over the political landscape in Greece as the Pasok party attempts to cobble together a ruling coalition able to meet the country's commitments under the EU/IMF bailout program. Failure to do so would reinforce increasingly credible fears that Greece may be forced to leave the Eurozone and possibly the EU altogether, an unprecedented outcome with no forecast-able benchmark in terms of its practical implications for financial markets. With that in mind, continued uncertainty is likely to perpetuate capital flight out of Euro-denominated assets. Given the floor imposed on the Swiss Franc via SNB intervention, the next logical regional haven has become the Pound. -IS
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and charts from FXCM.
12 May 2012 01: 14 GMT

[[ British Pound Looks to Q1 GDP Report to Support Continued Gains ]]

Fundamental Forecast for British Pound: Bullish

• Sterling Gains as CPI Posts First Gain in Six Months
• UK Unemployment Rate Unexpectedly Fell in March
• BOE Minutes Reveal Posen Abandoned Call for QE
• British Pound Surges on Strong Retail Sales Report

The British Pound stands apart from most of its major counterparts, with prices primarily responsive to domestic monetary policy expectations rather than the broad-based sense trends that dominate much of the FX space. Indeed, GBPUSD now shows a tremendous correlation with 2-year UK bond yields, which implicitly reflect traders' outlook for the near-to medium-term path of borrowing costs.

In the week ahead, this puts the focus on the first - quarter set of GDP figures. Expectations call for output to rise 0.1 percent in the three months through March after shrinking in the fourth quarter, avoiding the onset of a technical recession. The probability of such an outcome has been enhanced by an equivalent reading on a closely-watched private sector estimate from NIESR, a London-based consultancy. Validation of a return to growth is likely to offer further support to front end UK bond yields, reinforcing Sterling's recent gains and offering scope for a continued advance. Needless to say, a downside surprise would go a long way toward deflating the currency's momentum.

With that in mind, it is important to note that the Pound's recent advance against the majors has likely produced the need for a corrective pullback or at least a period of digestion. With that GDP report not due until mid-week, that means the UK unit initially may find itself lacking for firm upside momentum. Indeed, a period of corrective weakness driven by near-term profit-taking appears reasonable. -IS

¥ British Pound Unlikely to Find Clear Bearing in BOE Minutes, Jobs Data ¥

18 April 2012 07:22 GMT  Talking Points

Bank of England Minutes Unlikely to Signal Change in Policy Framework British Pound May See Muted Reaction to Increase in UK Jobless Claims Yen Sold as Asian Stocks Rise After IMF Upgrades 2012 Growth Outlook Minutes from April’s Bank of England policy meeting headline the economic calendar in European hours. Traders will look to the voting pattern on the rate-setting MPC committee to gauge the possibility of additional stimulus in the near term. Two votes in favor of further easing from known doves David Miles and Adam Posen represent the status quo, with anything more perceived as a shift in favor of further accommodation that is likely to weigh on the British Pound. Alternatively, an 8-1 or 9-0 outcome will probably prove supportive.

On balance, we suspect another 7-2 outcome coupled with neutral rhetoric is the path of least resistance, with most BOE officials waiting for February’s increase in asset purchases to be fully absorbed and an updated quarterly inflation report to be produced in May. Jobless Claims figures are also on tap, with expectations calling for a 6,000 increase in applications for benefits in March. A print in line with expectations doesn’t present a material change in overall labor market trends and so may not produce a meaningful response from price action.

The Japanese Yen slumped overnight – sliding as much as 0.7 percent against its leading counterparts – as a rally across Asian stock exchanges sapped safe-haven demand. The MSCI Asia Pacific regional benchmark equity index added 1.2 percent after the IMF upgraded its outlook for world economic growth in 2012. The fund now believes global output will add 3.5 percent this year, up from a January estimate of 3.3 percent. Importantly, this still marks a slowdown from the 3.9 percent increase recorded in 2011. The key features of the macroeconomic landscape – a pickup in the US against a backdrop of recession in the Eurozone and a slowdown in China – likewise remained in place.

Asia Session: What Happened

Westpac Leading Index (MoM) (FEB)

ANZ Consumer Confidence Index (APR)

ANZ Consumer Confidence (MoM) (APR)

Euro Session: What to Expect

Euro-Zone Current Account n.s.a. (€) (FEB)

Euro-Zone Current Account s.a. (€) (FEB)

Average Weekly Earnings (3M/YoY) (MAR)

Weekly Earnings ex Bonus (3M/YoY) (MAR)

ILO Unemployment Rate (3M) (FEB)

Euro-Zone Construction Output s.a. (MoM) (FEB)

Euro-Zone Construction Output w.d.a. (YoY) (FEB)

Credit Suisse ZEW Survey (Expectations) (APR)

Critical Levels

""" British Pound Outlook menacé par la BoE Minutes, CPI

14 April 2012 04:17 GMT 

Fundamental Forecast for British Pound: Neutral

The British Pound had a particularly weak past five days, although most of the downside came against the commodity currency complex and the Japanese Yen. The Sterling lost 1.03 percent to the Yen, while losing 0.75 percent and 0.60 percent to the Australian and New Zealand Dollars, respectively. Considering the performance of the UK Gilts this past week (yields fell), it’s of little surprise that the Pound was under pressure (falling yields reduce a currency’s appeal). With respect to global risk trends, the British Pound could be due for a solid bounce against the commodity currencies as global growth prospects continue to ease; but with the Bank of England looming, we could see the Pound drop against the Japanese Yen and the US Dollar.

In light of Standard & Poor’s confirmation of the United Kingdom’s ‘AAA’ rating, it is clear that there has been a dynamic shift in the structure of the British economy that has made it relatively more secure than other European economies. Taking this into consideration, it is evident that British fundamentals are improving: growth hasn’t tanked in the face of austerity; the labor market is relatively stable; and inflation continues to cool. While Standard & Poor’s has recognized this, other rating agencies have not: Fitch Ratings and Moody’s Investor Services both have the United Kingdom’s top ‘AAA’ rating on a “negative outlook.”

Any confusion that these differing views offer should be made clearer after the release of the Bank of England minutes on Wednesday. While there was no statement accompanying the rate decision, we do know that there are still some prominent doves on the Monetary Policy Committee – at least two of the nine – that are calling for an expansion of the BoE’s asset purchase program (APP). Perhaps there is an argument to be made: inflation has cooled in recent months but any excess growth gained from improved purchasing power among consumers has been wiped out by fiscal austerity. Thus, while we typically refer to the BoE minutes as the most important event this week, we turn to the release of the consumer price index for March.

Ahead of the minutes (which won’t reflect the new inflation data) the consumer price index for March is due, and the forecasts look promising for the aforementioned dovish policymakers. The headline year-over-year figure is expected to remain steady at 3.4 percent (month-over-month forecasted to drop to 0.3 percent from 0.6 percent in February) but the more important gauge – the core reading that excludes food and energy costs – is expected to slip to 2.3 percent y/y from 2.4 percent y/y.

If inflation is going to continue to meander lower, it is likely that BoE policymakers reignite their quantitative easing operation to purchase another £50 billion in the months ahead. By no means is the British economy out of the woods – at least two of the major rating agencies would agree. Whereas we expect the Pound to appreciate against the commodity currencies in the days ahead, more talk of QE will hurt the Pound’s prospects against the Japanese Yen and the US Dollar. – CV

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and charts from FXCM.

14 April 2012 04:17 GMT

^^ British Pound Outlook Threatened By Slower Growth, Inflation ^^

Fundamental Forecast for British Pound: Bullish

• GBPUSD: Looking for Short Entry Opportunities
• GBPUSD Corrective Advance Expected
• British Pound Likely to Fall Further

The British Pound bounced back during the holiday trade to maintain the upward trend from earlier this year, but we may see the sterling struggle next week as the economic docket is expected to reinforce a weakened outlook for the U.K. As the event risks on tap for the following week are anticipated to dampen the prospects for growth and inflation, a slew of dismal developments could spark a sharp selloff in the exchange rate, and we may scale back our bullish forecast for the GBPUSD should the exchange rate slip back below interim support around 1.5800.

At the same time, we will be closely watching the fresh batch of commentary from Bank of England official Adam Posen as he continues to push for another GBP 25B in quantitative easing, but we may see the board member soften his dovish tone for monetary policy as the central bank anticipates to see a more robust recovery later this year. Although the Monetary Policy Committee refrained from releasing a policy statement after maintaining its current policy stance in April, the board said it would take another month to complete the GBP325B in bond purchases, but it seems as though the MPC is looking to conclude its easing cycle this year as the committee now see a limited risk of undershooting the 2% target for inflation. Indeed, the shift in the policy outlook should continue to prop up the sterling as market participants scale back bets for more quantitative easing, and we may see the British Pound outperform against its major counterparts as interest rate expectations pick up.

As the GBPUSD appears to be carving out a higher low around 1.5800, the pair could be building a base for a sharp move to the upside, and we may see the exchange rate make another run at 1.6000 should the developments coming out of the U.K. dampen expectations for more QE. In turn, it looks as though the upward trending channel will continue to take shape in April, and we will maintain a bullish outlook for the British Pound as the BoE raises its fundamental assessment for the region. – DS

British Taxpayers Are Not to Be Messed With

February 7th, 5:00 am
In Britain, they do not joke around. The former chief executive officer of the Royal Bank of Scotland, Fred Goodwin, was stripped of his knighthood by Queen Elizabeth II Wednesday as punishment for his role in the 2008 financial crisis.
The title was originally given to the banker in 2004 for his services rendered to the banking world. He will be the 35th person to be deprived of the title Sir since 1995.
The RBS, which had to receive 45.5 billion pounds worth of aid during 2008 and 2009, has been identified as one of the main drivers behind the 2008 financial crisis. Throughout the crisis and the events leading up to it, Goodwin was the bank’s primary decision maker.
During the crisis of 2008, the RBS and Lloyds TSB received billions of pounds in taxpayer money from Her Majesty’s Treasury. In exchange, the British government was given shares in the two troubled banks.
By the end of 2008, the RBS had lost a record 24.1 billion pounds, with Goodwin announcing in October of that year that he would be stepping down as CEO. In 2009, losses – though still significant – dropped to 3.6 billion pounds.