GBP/USD Hits 6-Week Low
Growth Aces | Jul 29, 2014 08:33AM ET
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GBP/USD
- The Bank of England said on Tuesday that mortgage approvals numbered 67,196 last month, up from 62,007 in May. The data were stronger than expected. The Governor of the Bank of England Mark Carney has said that housing bubble is the biggest domestic threat to Britain's economic recovery. He says controls on bank lending will be the most important tool in fighting against a housing bubble, rather than an increase in interest rates. The Bank of England has been trying to cool the mortgage market since January when it refocused its Funding for Lending Scheme away from mortgage lending and dedicated it exclusively to business lending.
- BoE Deputy Governor Ben Broadbent said today that sluggishness in the global economy would make it harder for Britain to achieve strong and balanced growth. In his opinion Britain's large current account deficit does not pose a threat to the economic recovery.
- The GBP/USD hit a day's high of 1.6995 after the data and then retreated. It is difficult for the GBP to strengthen when the short position on the EUR/USD is predominant on the market. The GBP/USD is near the support level of 1.6949 (lows from June 25).
Short-term outlook: mixed
Medium-term outlook: mixed with bullish bias
Long-term outlook: mixed with bullish bias
USD/JPY
- Japanese household spending fell 3.0% yoy in June. The data were better than median market forecasts (-3.8%) and our prediction (-4.0%) and much better than the 8.0% decline in the year to May. Retail sales fell 0.6% in June from a year ago, slightly more than the median estimate for a 0.5% and vs. a decline 0.4% yoy in May.
- Japanese labour market data were also released today. The jobless rate unexpectedly rose to 3.7% in June from 3.5% in May. The jobs-to-applicants ratio rose to 1.10 in June from 1.09 in the previous month. That is the highest level since June 1992.
- BOJ board member Koji Ishida said that the impact of April's sales tax hike was likely to be receding gradually. He added, however, that domestic structural factors might further delay a rebound in export.
- The USD/JPY was testing the level of 102.00 today, where we have cloud resistance. Even if we move through here we also have trend line resistance at 102.40.
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Short-term outlook: mixed with bearish bias
Medium-term outlook: mixed
Long-term outlook: mixed with bullish bias
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