Forex - GBP/USD gains on upbeat BoE inflation report

The pound strengthened against the dollar on Wednesday after the Bank of England said in its inflation report that jobless rates may decline somewhat faster than once expected.

In U.S. trading on Wednesday, GBP/USD was trading at 1.6018, up 0.72%, up from a session low of 1.5879 and off from a high of 1.6046.

Cable was likely to find support at 1.5854, Tuesday's low, and resistance at 1.6118, the high from Nov. 6.

The pound saw support after the BoE’s quarterly inflation report released earlier predicted that the U.K.'s unemployment rate will fall faster than it expected three months ago. 

BoE Governor Mark Carney stressed that there is a "two in five chance" that it could be 7% at the end of 2014, though the central bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.

Still, the optimistic outlook gave the pound support.

The BoE added it now expects economic growth of 1.6% this year, up from 1.4% predicted in August, and said growth will hit 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.

The bank said inflation fell back in the four months to October somewhat more than expected at the time of the August report. The near-term inflation outlook is lower than expected three months ago, and inflation is likely to fall a little further during 2014, helped by the recent appreciation in sterling.

Separately, the Office for National Statistics on Wednesday said that the number of individuals claiming unemployment benefits in the U.K. fell by 41,700 in October, better than expectations for a decline of 35,000 people.

September’s figure was revised to a drop of 44,700 people from a previously reported decline of 41,700.

The unemployment rate ticked down to 7.6% in the three months to September the ONS said. 
Economists had expected the unemployment rate to remain unchanged at 7.7%.

The pound, meanwhile, was up against the euro and up against the yen, with EUR/GBP down 0.56% at 0.8401 and GBP/JPY up 0.46% at 159.19.

The euro weakened earlier after ECB executive board member Peter Praet told the Wall Street Journal that the bank could cut deposit rates to below zero and commence asset purchases to lift inflation closer to its target of just below 2%.

Praet's comments came amid fears that deflationary pressures are growing in the euro area. The euro zone's annual inflation rate fell to a four-year low of 0.7% in October, prompting the ECB to cut rates to a record low 0.25% last Thursday.

On Thursday, the U.K. is to produce data on retail sales, while the U.S. is to release official data on the trade balance and its weekly report on initial jobless claims.

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Forex - GBP/USD higher after BoE report, UK jobs data

The pound traded up to session highs against the dollar on Wednesday after the Bank of England brought forward the date it expects the unemployment rate to hit the 7% threshold at which it will consider raising rates and revised up its forecast for growth.

GBP/USD rose 0.43% to 1.5972 during European afternoon trade, after rising as high as 1.6002 earlier.

Cable was likely to find support at 1.5877, the session low and resistance at 1.6050.

The pound added to gains against the dollar after the BoE’s quarterly inflation report said the unemployment rate will fall faster than it expected three months ago. BoE Governor Mark Carney said there is a "two in five chance" that it could be 7% at the end of 2014.

The bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.

The BoE said it now expects economic growth of 1.6% this year, up from 1.4% in August and growth of 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.

The bank said inflation fell back in the four months to October by more than expected at the time of the August report. The near-term outlook for inflation is lower than expected three months ago and inflation is likely to fall a little further during 2014, helped by the recent appreciation in sterling.

Data released on Tuesday showed that the annual rate of inflation in the U.K. slowed to 2.2% in October, the lowest since September 2012, from 2.7% the previous month. Economists had expected the inflation rate to slow to 2.5%.

The pound came off session lows against the dollar earlier following the release of stronger than expected U.K. jobs data.

The Office for National Statistics said that the number of people claiming unemployment benefits in the U.K. fell by 41,700 in October, better than expectations for a decline of 35,000 people.

September’s figure was revised to a drop of 44,700 people from a previously reported decline of 41,700.

The rate of unemployment ticked down to 7.6% in the three months to September the ONS said. Economists had expected the unemployment rate to remain unchanged at 7.7%.

Elsewhere, sterling was higher against the euro, with EUR/GBP down 0.56% to 0.8400, after falling as low as 0.8384 earlier.

In the euro zone, data released on Wednesday showed that industrial production fell 0.5% in September from a month earlier, but was 1.1% higher on a year-over-year basis. Economists had forecast a monthly decline of 0.3% and an annual increase of 0.2%.

Meanwhile, official data showing that the annual rate of inflation in Spain fell by 0.1% in October added to fears over growing deflationary pressures in the euro area. The downward trend in inflation prompted the European Central Bank to cut rates to a record low 0.25% last week.

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Forex - Euro lower vs. dollar after euro zone factory data

The euro slipped lower against the dollar on Wednesday amid heightened expectations that the Federal Reserve will start tapering asset purchases as soon as the end of this year, while mixed euro zone factory data also weighed.

EUR/USD slipped 0.15% to 1.3415 during European afternoon trade, still holding above the seven-week low of 1.3294 struck last Thursday.

The pair was likely to find support at 1.3343, Monday’s low and resistance at 1.3455, Tuesday’s high.

Last week’s stronger than forecast U.S. nonfarm payrolls report prompted investors to bring forward expectations for a reduction in the Fed’s USD85 billion-a-month asset purchase program.

Investors were turning their attention to Thursday’s Senate hearing to confirm Janet Yellen as the first chairwoman of the Federal Reserve, for indications on the future course of U.S. monetary policy.

The euro slid after data released on Wednesday showed that industrial production in the euro area fell 0.5% in September from a month earlier, but was 1.1% higher on a year-over-year basis. Economists had forecast a monthly decline of 0.3% and an annual increase of 0.2%.

Meanwhile, official data showing that the annual rate of inflation in Spain fell by 0.1% in October added to fears over growing deflationary pressures in the euro area. The downward trend in inflation prompted the European Central Bank to cut rates to a record low 0.25% last week.

The euro was lower against the yen, with EUR/JPY down 0.37% to 133.39.

Elsewhere, the shared currency fell to session lows against the broadly stronger pound, with EUR/GBP down 0.56% to 0.8400.

Sterling strengthened across the board after the Bank of England’s quarterly inflation report said the unemployment rate will fall faster than it expected three months ago. BoE Governor Mark Carney said there is a "two in five chance" that it could be 7% at the end of 2014.

The bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.

The BoE also revised up growth forecasts, saying it now expects economic growth of 1.6% this year, up from 1.4% in August and growth of 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.

The pound received an additional boost after official data on Wednesday showed that the number of people claiming unemployment benefits in the U.K. fell more than expected in October.

The U.K. unemployment rate ticked down to 7.6% in the three months to September. Economists had expected the rate of unemployment to remain unchanged at 7.7%.

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Forex Trading Signal for 13th November 2013

                                                                                


Japan (Tokyo)                               United Kingdon (London)                        USA (New York)

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EUR/USD

 Up Trend :

 (1) BUY

E/P: 1.34204

T/P: 1.34504

S/L: 1.33900

 

GBP/USD

Down Trend:

(1) SELL

E/P: 1.58960

T/P: 1.58600

S/L: 1.69300

NOTE: The above posted Signals are delayed 2 - 4 hours after it has been  generated.
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