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Pound Up Versus Dollar After Better That Expected Housing Survey

The pound is mixed this morning, consolidating slightly against the euro, but gaining versus the dollar after report showed that house prices in UK unexpectedly increased in March. The Nationwide house prices gauge reported stronger than expected figures, as the average cost of a home increased by 0.5% from February to 164,751 pounds. March saw the second consecutive monthly increase in the house prices and the index has now been increasing in three of the last four months. However, any major revival in the housing market is unlikely while the job market remains weak and consumer confidence subdued. Gfk Consumer Confidence figures were also released during the early morning session, with the measure remaining unchanged in March at –28. Looking ahead to today, the Bank of England Credit Conditions Survey for the first quarter is released today and MPC member David Miles is speaking today at Home Builders Conference. The pound rose 3.0% against the dollar since the beginning of the year on speculation the Bank of England will raise interest rates before the Federal Reserve.   

The euro gained across the board this morning before the release of Eurozone Inflation data as market participants expect for the figure to remain above ECB’s 2% limit. Inflation in the 17-nation euro region is expected to remain at 2.4% in March. The euro was supported against most of its major rivals even amid concern that Portugal will need a financial rescue and Ireland’s banks may need more capital as ECB policymakers have signaled they will increase interest rates at their next meeting. In addition, Germany’s unemployment rate declined twice as much as economist forested to 7.1% in March from 7.3% in the previous month, as German companies continue to hire at a growing pace. Looking ahead to today, Germany will release its Retail Sales figures and Ireland will publish the results of bank stress tests. Expect for the euro to remain supported against its major rivals as ECB is expected to raise interest rates in April and as European largest economy is outshining its rivals.

Pound Gains Before CBI Sales Release

The pound is higher against most of its major rivals before the CBI distributive sales survey release today at 11:00. The Confederation of British Industry index is expected to drop to –2 in March after reaching to 6 in the previous reading. However some market participants believe that there is upward potential for the headline figure. Separately, MPC member Paul Fisher is speaking today in Manchester at 2:30. As Mr Fisher is a key undecided member of the committee it will be interesting to hear his outlook on the UK economy, and the text of his speech will be released afterwards. Expect for the pound to remain supported should we see the retail sales figure surprise on the upside. 

The euro consolidated across the board during the overnight trade after Standard & Poor’s rating agency downgraded credit ratings of Portugal and Greece. S&P cut Portugal’s rating to BBB- from BBB with negative outlook, making this the second downgrade since Friday. This rating is the agency’s lowest investment grade rating and is just one notch above junk. The Greek rating, which had already been cut to junk, was lowered to BB from BB+. Looking ahead to today, Eurozone Consumer Confidence release headline the economic calendar, with the expectations for the numbers to consolidate slightly. 

The dollar gained against the euro and the yen during the Asian session on speculation that the Federal Reserve may not complete its asset purchase plan to buy 600 billion dollars in Treasury bonds. St Louis Fed President James Bullard said recently that bank officials may “reverse” its current policy. The greenback was also supported on expectation that US companies managed to add more jobs in March. Looking ahead to today, MBA Mortgage Applications and ADP Employment change headline the economic calendar. Expect the dollar to remain supported ahead of Friday’s non-farm payrolls release.

Pound Consolidates Versus Euro Before Final Q4 GDP

The pound is mixed this morning, gaining slightly against the dollar, but consolidating against the euro before final Q4 GDP data release. Final reading of fourth quarter gross domestic product is expected to remain unrevised at –0.6% and 1.5% on yearly basis. Also scheduled for today is the fourth quarter current account deficit, with the expectation for figure to have widened to 10.5 billion pounds. In addition, February BoE lending data and mortgage approvals are also released, with the expectations for the numbers to improve slightly. Separately, MPC Member Martin Weale, one of the officials who voted for the rate increase, is speaking today at 4:00. Expect the pound to remain in current ranges against its major rivals as it looks like the economic recovery is not picking up as previously expected. 

The euro is higher across the board during the overnight trade on speculation that European Central Bank officials will increase interest rates at their next meeting. ECB President Jean Claude Trichet said yesterday inflation rates that stick above 2% would be a concern for the bank. Looking ahead to today German inflation figures and French Consumer Spending release headline the economic calendar. Expect for the single currency to remain in current ranges as today’s inflation figures are expected to confirm ECB’s hawkish stance. 

The US dollar consolidated against most of its major rivals during the overnight trade as Asian stocks pared its recent loses. The greenback was up yesterday after US consumer spending increased more than expected in February. Consumer spending gauge increased by 0.7% after advancing 0.3% in January. Also supporting the dollar was the statement from the Federal Reserve official James Bullard as he said that the central bank may consider scaling back its monetary stimulus. Looking ahead to today, Consumer Confidence and S&P/ChaseShiller Home Price release headlines the economic calendar. Expect for the greenback to remain supported against major rivals before non-farm payrolls release on Friday.    

Pound Drops After Weak Retail Sales Release

The pound dropped to a lowest level against the euro since November after data showed that retail sales in February dropped more than previously expected. Retail sales gauge fell 0.8% from January, exceeding median estimate of a 0.6% decline. The pound came under pressure on Wednesday after the Bank of England’s Minutes release showed that policymakers voted 6-3 to keep interest rate on hold. Chief Economist Spencer Dale, who voted to raise the key rate, yesterday said he would reconsider his stance if the recovery stumbles. In addition, the Office for Budget Responsibility expects British economy to grow 1.7% in 2011, down from November’s 2.1% forecasts. As there are no data releases or policy speeches scheduled for today, expect for the pound to remain driven by market risk aversion for the reminder of the day.   

The euro outperformed most of its major rivals as EU leaders summit continues to stir currency markets. Cash contributions to the future fund, known as the European Stability Mechanism, will amount to 80 billion euro spread over five equal annual installments. Another 620 billion euros will be callable, to give the fund an AAA rating with a lending capacity of 500 billion euros. Looking ahead to today, German IFO Survey of business confidence headlines the economic calendar, with the expectations for the figure to remain supported in March. Expect for the single currency to outperform its peers as we expect the ECB to increase its base interest rate at their next meeting. 

The dollar is mixed this morning, gaining against the broadly weaker pound, but consolidating against the euro, as investors believe that the ECB will hike interest rate at their next policy meeting. It looks like the greenback lost its safe haven appeal despite the conflict in the Middle East, disaster in Japan and European debt crisis. Economist believe that the main reason for that is Federal Reserve’s dovish stance on the interest rate policy, as Mr. Bernanke pledged to keep base rate lower for longer than its European counterparts. Looking ahead to today, University of Michigan Consumer Confidence and final reading of fourth quarter GDP headline the economic calendar.

Pound Drops Before Retail Sales Release

The pound consolidated against most of its major rivals during the overnight trade before today’s retail sales report release.  February retail sales gauge most probably dropped 0.6% from the previous month, when it gained 1.9%. Report from the British Retail Consortium released earlier this month indicates that there is possibility for the downside surprise in the figure. Sterling came under pressure yesterday after Bank of England minutes showed no change in policy and government’s budget report cut UK’s growth forecast. Chancellor of the Exchequer George Osborne raised next year’s borrowing target in it’s budget speech and said the OBR (Office for Budget Responsibility) now sees economic growth of 1.7% in 2011, down from November’s 2.1% forecast.  Separately, the MPC Minutes release showed that central bank officials most probably want to wait another month or two before they intervene with interest rates hike. Expect for the pound to remain in current ranges with possible downside pressure against the US dollar should we see the retail sales figure coming out worst than expected. 

The euro weakened across the board after Moody’s Investors Service cut the ratings on 30 Spanish banks to reflect Spain’s sovereign downgrade. Moody’s downgraded Spanish credit ratings to Aa2 on March 10, citing that Spanish lenders may need as much as 50 billion euros to meet new capital requirements. The single currency came under pressure yesterday after Portuguese PM Jose Socrates offered his resignation following parliament’s rejection of plans to cut budget. Looking ahead to today, Eurozone Purchasing Managers Index headlines the economic calendar, with expectations for the March figures to drop from previous month. In addition, EU Leaders Summit begins in Brussels today. Expect for the euro to remain volatile as debt crisis in its peripheral countries in back on the agenda.

Pound Up Before Government’s Budget Report

The pound gained against most of its major rivals during the overnight trade ahead of today’s Budget report and BoE’s Minutes release. Chancellor of the Exchequer George Osborne will present nation’s budget today at 12:30. The OBR (Office for Budget Responsibility) will most probably project slightly higher government borrowing because high inflation will raise expenditure while pay growth remains weak. The OBR will also lower its GDP growth forecasts, reflecting the unexpected contraction in fourth quarter of 2010 and a sluggish outlook for household demand. Separately, the minutes from the March MPC meeting are also scheduled for today, with the expectations for the same vote split as in February. On their February meeting Adam Posen voted for more QE, while Messrs Sentence, Weale and Dale voted for higher interest rates, and the reminder voted for unchanged policy. Expect for the pound to experience a lot of volatility before Chancellor presets its Budget report later in the day.  

The euro consolidated across the board as stocks declined during the Asian session, boosting demand for so called safe haven currencies. The single currency dropped on fears that government in Portugal will be unsuccessful in its efforts to continue with its austerity measures. Portuguese government estimated on March 21 that the country’s gross domestic product will contract by -0.9% this year as investments drop and spending is reduced to narrow the budget gap. The European Central Bank has been forced to maintain its role as a buyer of government debt after EU leaders decided that the region’s bailout fund (European Financial Stability Facility) will purchase bonds directly from the governments and not from the secondary market. Expect the single currency to remain in current ranges against major rivals with potential downside pressure should we see the shift in ECB’s sentiment.    

Pound Up Ahead Of Today's Inflation Report

The pound is higher against most of its major rivals this morning, ahead of the inflation figures release at 9:30. Consumer prices data for February are expected to increase by 4.2% after rising 4.0% in January, and RPI inflation is expected to print 5.2% increase. Public finance data for February are also scheduled for today, with the expectations for the PSNB (Public Sector Net Borrowing) excluding financial intervention to be 7.2 billion pounds and a PSNCR (Public Sector Net Cash Requirements) to reach –4.2 billion. In addition, CBI Industrial Trends survey is published today at 11:00, with consensus forecast for the total orders balance to rise to –6 from –8 in February.  Expect for the pound to remain supported against major rivals should we see the inflation rising above the expectations.  

The euro is higher across the board this morning, especially versus the US dollar on speculation the European Central Bank will increase base interest rates at their next meeting. ECB meets on April 17 and most of its officials have indicated that economic uncertainty caused by Japan’s earthquake may not deter them from a rate increase. ECB President Jean Claude Trichet told the European Parliament that he has “nothing to add” to his March 3 remarks, when he stated policy makers may raise base interest rate at their next meeting. With relatively light economic calendar scheduled for today expect the single currency to remain supported against its major rivals.

Pound Flat Before This Week's Budget Report

The pound is mixed this morning, remaining relatively flat versus euro, but gaining 0.5% against the US dollar. There are no economic data or policy speeches scheduled for today. Looking ahead to this week, the main event will be the Budget report on Wednesday.  British Treasury Chief George Osborne is expected to continue with harsh governments spending cuts and analysts do not expect any material change in the deficit reduction plan. The minutes from the March MPC meeting are also published on Wednesday. The prospects are for the committee to have voted 6-3 in favor of holding the policy rate unchanged and 8-1 in favor of holding QE unchanged. BoE Chief Economist Spencer Dale said the UK recovery is likely to be sustained and investors expect global interest rates to increase faster than projected last year. In addition, CPI inflation figures are scheduled for tomorrow, with the expectations for the figure to have reached 4.2% in February from 4.0% in the previous reading. With light economic calendar scheduled for today, expect the pound to follow sentiment trends. 

The euro consolidated slightly against the most of its major rivals and German government bonds declined as Japan’s nuclear crisis eased. ECB President Jean-Claude Trichet speaks at the Quarterly Hearing before the European Parliament in Brussels today. Looking ahead to this week, Eurozone purchasing manager’s index data for March, due on Thursday, will offer an insight into economic rebound in the single currency region. That is followed by Germany’s Ifo business survey is on Friday, with the expectations for the figure to deteriorate slightly. Expect the single currency to remain supported against the major’s as long as the ECB officials remain pledged to the interest rate hike at their April meeting. 

The dollar experienced a lot of volatility in recent days as turmoil in Libya and atomic crisis in Japan influenced the US currency.  Looking ahead to this week, existing home sales data for February are due on Wednesday, with expectations for the figure to give up some of the recent gains. Also scheduled for this week are durable goods orders (Thursday), with projection for the figure to remain in the upward trend.  

Pound Drops Versus Euro After Consumer Confidence Release

The pound dropped against the euro during the overnight trade after UK consumer confidence fell to a record low in February. A Nationwide index sentiment dropped to 38 from previous 47 reading, the lowest since records began in 2004. A Nationwide survey also showed that consumers remained pessimistic about Britain’s housing market, expecting the value of their home to fall 1.1% over the next six months. The UK recovery remains under pressure as there was little positive news in February, especially after the economy contracted in the fourth quarter of 2010 and inflation soared above Bank of England’s 2% target. BoE officials most probably split four ways on their March meeting as they debate whether to increase base interest rate from a record low of 0.5%. BoE’s Minutes report is scheduled for next Wednesday and will bring clearer picture of the MPC’s stance. Separately, Japanese yen dropped 3.5% versus the pound during the overnight trade as the Group of Seven nations pledged to jointly intervene in the foreign-exchange markets. As there are no data releases or policy speeches listed for today, expect for the pound to remain under pressure for the reminder of the week. 

Pound Drops On Recovery Concerns

The pound dropped across the board during the overnight trade on increased worries about the pace of the UK’s economic recovery. The OECD warned that the recovery in the UK economy will be significantly slower, forecasting subdued growth in 2011 at a 1.5% level and 2% in 2012. However, OECD urged the government to stay on course on its austerity plans and suggested that monetary policy should remain loose to promote recovery. The pound dropped against the dollar as worries about the Japan’s nuclear crisis pushed investors in perceived safety of the US currency. Looking ahead to today, the Bank of England will publish the results quarterly inflation expectations and BoE official Andrew Bailey Speaks in Manchester today. On the other side of the Atlantic, Industrial Production and Inflation figures are released today, with the expectations for the numbers to improve in February. With relatively light economic calendar scheduled for today expect for the pound to remain under pressure as market risk aversion weight on the UK currency.