Sterling

The latest data from the Office for National Statistics estimates that in 2014, the UK economy grew 2.8% across the year, up 0.2% from previous estimates. In Q3 and Q4 of 2014 the economy expanded by 0.6%. Growing at a faster pace than previously estimated, has been boosted by strong export performance. There had been concerns that the weakening of the Euro, could harm exports as the Eurozone is the UK’s major trading partner. GBP In the FX markets EURGBP traded lowe…

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The official starting gun for the UK general election has begun, as the current Prime Minister David Cameron ceremonially visits the Queen to dissolve parliament. The coming UK election is likely to have no overall majority and is one of the closest modern elections. What does this mean for Sterling? The uncertainty of the electoral outcome is a risk to the UK’s currency. The two main parties (Conservative and Labour) will need to create a coalition to form a government but…

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The ONS has released the inflation data (CPI) for February, which has fallen to zero. Governor of the BoE Mark Carney had warned markets that in the near term inflation would fall, but in 12 months pick up quickly. The latest release from the ONS is the lowest level for CPI since inflation estimates began in 1988. The ONS release highlighted the slowdown in inflation to price movements in recreational goods, food and furnishings. This reading was key for policy makers as the primary impact f…

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Bank of England Minutes 9:30am At 9:30am London the Bank of England minutes for the MPC meeting held on the 4 and 5 March will be released. The expectation is that the members voted unanimously (9 - 0) to leave interest rates and asset purchases unchanged. Traders will be checking through the minutes of the meeting for any signals of the timing of the tightening of policy. This month is six years that the base interest rate has been held at the record low of 0.50%. Employment da…

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On Thursday comments from governor of the Bank of England weighed on the pound, with the sentiment following through into European trade on Friday. The pound weakened to the lowest value against the US dollar since July 2013. Disappointing data released by the ONS, showed that construction output had collapsed by 2.6% in January compared to December. Next Wednesday (18 March) the Bank of England releases the minutes from their meeting held on 4 and 5 March. The March rate announcement…

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Governor of the Bank of the England spoke at the University of Sheffield Advanced Manufacturing Research Centre and dampened market expectations of policy tightening. Carney explained that the Bank expected interest rates to return to target (2%) within 2 years, which is significantly higher than January’s record low reading of 2%. The rhetoric from MPC members has been confusion for traders attempting to gauge the expected timeframe of policy tightening. UK interest rates have r…

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At noon the Bank of England’s Monetary Policy Committee (MPC) will announce if there is a change to interest rates or the asset purchase programme. The current base rate is 0.5% and today’s announcement marks six years since the MPC cut interest rates to the record low. The expectation is a vote for rates and QE (£375bn) to be left unchanged. The Bank of England’s MPC remit is to target 2% inflation, over the last few years the economy consistently overshot as t…

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The latest indicator for the UK economy; Markit Services PMI (Feb) 56.7 vs consensus of 57.4, this follows beats in manufacturing data. Following the release GBPUSD has been offered and weakened against the US dollar. Prior to the release GBP reached a new 7 year high against the Euro. The figure service sector growth is still a strong figure, however it is slightly below expectations. A positive from the data release was the that “new business increased at sharpest pace for thre…

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Macro Outlook UK General election A major potential risk for Sterling over the short to mid-term is the potential of an inconclusive majority in government with the coalition discussions being drawn out. The recent polls for the election don’t show a conclusive majority for either of the major political parties, with one of the minor parties expected to be the maker of any coalition leadership. Bank of England rate hike The market has priced in a rate hike for Q…

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The FTSE 100 is edging closer to its all-time record high reached on the final day of trading in 1999 at the height of the tech bubble. The components of the index are heavily weighted by financial and commodity companies that have had significant declines over the last 15 years. The index is isn’t a proxy for the growth of the UK economy due to the high percentage of global exposure from earnings for the components. FTSE 100 currently trading 6910, the record intra-day high is 6…

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The Bank of England minutes for 4 and 5 February headline announcements were as expected, the MPC voted unanimously (9-0) to leave interest rates and quantitative easing unchanged. The current ultra-loose monetary policy is interest rates at the record low of 0.50% and asset purchases (QE) at £375bn. The ONS released the ILO Unemployment for February with the rate dropping to 5.7% below expectations of 5.8%. The UK claimant count fell to 823,000 in January, lowest since May 2008,…

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Andy Haldane, the Bank of England’s Chief Economist and member of the MPC spoke with a regional newspaper on Wednesday while touring North Wales and speaking with business.. He was quoted as saying to theDaily Post“We are in no rush to raise rates, the recovery is taking hold nicely, the last thing we want to do is knock the stuffing out of that.”Comments like this do confuse the market, with the current consensus for a Q1/2 2015. He continued on to say “People…

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The Bank of England released the minutes for their meeting held on 7 and 8 January 2015. At recent meetings two members voting for an increase of in interest and a 9 – 0 vote for leaving asset purchases unchanged. Current policy; Interest rates: 0.5% Asset purchases (QE): £375bn Last month’s inflation rate for the UK at 0.5% the joint lowest reading on record seems to have been the leaning factor for McCatherty and Weale to switch their votes. Infla…

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The Bank of England MPC has just announced (12.00pm London) that they have as expected left interest rates and asset purchases unchanged. The MPC has concluded their two day meeting, 7 and 8 January 2015. Current base interest rate: 0.5% Asset purchases (QE): £375bn The minutes for today’s MPC meeting will be released on Wednesday 21 2015. Traders will be eager to see if there has been a change in the committees voting split (previously 7 -2) and to disseminate…

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UK Markit/CIPS UK Services PMI disappoints at 55.8 vs (Previous 58.6). The pace of growth stuttered in the service sector in December. The data adds to the confusion over the health of the economy, and adds weight to the view of that a rate rise in 2015 is diminishing. GBPUSD In the FX market Sterling traded lower following the release of the PMI data, trading to a new session low of 1.5187. (Session high 1.52735) Full data release…

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