strong>Summary
Last week we saw a flurry of pound bullishness, pushing the price up through the 1.25 handle. This is was mainly driven by politically important news, mainly in relation to Brexit concerns. The British high court has decided the government does not have the power to trigger article 50 without consulting parliament, bringing what appears to be a halt to Theresa May’s attempt at a “Hard Brexit. It must be noted that this does not necessarily challenge the notion of Brexit itself, but does seem to bring back investor confidence, for how long however, will have to unfold. Furthermore, the BoE had kept interest rates unchanged ( at 0.25%- a record low), the outcome of a unanimous vote. Noted however, within the BoE they had announce that “monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.”. Shown within the inflation report however, the BoE has revised its inflationary projections up to 2.2% for the year, downplaying the chances of any further rate cuts. Last week we had mixed data between BoE consumer credit, M4 Money supply , mortgage approvals, mortgage lending, net lending to individuals, Nationwide HPI (MoM) and (Yoy). Manufacturing numbers came out lower than expected, while construction PMI as well as services PMI surprised to the upside. All in all the pound seems to be being perceived as a less risky investment, while political uncertainty also seems be temporarily muted. Very importantly, it is the United States elections this coming week, and large increases in volatility is expected. Apart from election based volatility, due to reasons mentioned above, along with the fact that GBP prices closed higher agaisnt all its counterparts for the week ( shown below), I am a bull on the pound.
Technical Summary week; 31st Oct-4th Nov
GGBP/USD; Price opened at 1.2181 and closed at 1.25148 ( pound stronger)
GBP/JPY; price opened at 127.5600 and closed at 128.991 ( pound stronger)
EUR/GBP; price opened at 0.9011 and closed at 0.88891 ( pound stronger)
GBP/CHF; price opened at 1.2033 and closed at 1.21063 ( pound stronger)
GBP/CAD; price opened at 1.6279 and closed at 1.67723 ( pound stronger )
GBP/AUD; price opened at 1.6079 and closed at 1.63040 ( pound stronger)
GBP/NZD; price opened at 1.70782 and closed unchanged ( pound unchanged)
Overall; GBP exerted dominance over all its counterparts.
COT Report; 25th Oct- 1st Nov FULL REPORT HERE
Overall we have seen a slight increase in net long non-commercial positions, along with a slight decrease in net short non-commercial positions, whereby net short non-commerical positions still greatly exceeding net long non-commercial positions. Weekly closing price higher along with an overall increase in net non-commercial positions.
BoE consumer credit- – lower than forecast More info here
M4 Money Supply – lower than forecast More info here
Mortgage Approvals (sep) – Higher than expected More info here
Mortgage Lending (sep) – Higher than expected More info here
Net Lending to Individuals – Higher than expected More info here
Manufacturing PMI – Lower than expected More info here
Nationwide HPI (YoY) (Oct) – Lower than expected More info here
Nationwide HPI (MoM) (Oct) – Lower than expected More info here
Construction PMI (Oct) – Higher than expected More info here
Services PMI (Oct) – Higher than expected More info here
BoE MPC Meeting Minutes FULL REPORT HERE
BoE interest rate decision ; unchanged at 0.25%
BoE Governor Marc Carney’s Speech; Key points
Upcoming data for week of 7th-11th Oct
Monday– Halifax House Price Index (MoM) (Oct), Halifax House Price Index (YoY (Oct)
Tuesday – Industrial Production (YoY) (Sep), Industrial Production (MoM) (Sep), Manufacturing Production (MoM) (Sep),
Wednesday – Trade Balance (Sep), Trde Balance Non-EU (Sep)
Thursday – RICS House Price Balance (Oct)
Price chart Technical Overview
One thought on “GBP weekly overview; 31st Oct-4th Nov 2016”
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great analysis Dom….
i might be a contrarian though and sell the pound with risk off sentiment?? it’s going to be an interesting week!!