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The Pound Suffers as Bank of England Plays Catch-UpAshraf Laidi • Nov. 6, 2008
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GBB vs. ETF Alternatives
The GBP/USD exchange rate is a foreign exchange spot rate that measures the relative values of two currencies, the British pound and the U.S. dollar. When the British pound appreciates relative to the U.S. dollar, the GBP/USD exchange rate (and the value of the Securities) increases; when the British pound depreciates relative to the U.S. dollar, the GBP/USD exchange rate (and the value of the Securities) decreases. The GBP/USD exchange rate is expressed as a rate that reflects the number of U.S. dollars that can be exchanged for one British pound in the interbank market for settlement in two days. Effective December 18, 2008 the GBP/USD exchange rate will be the rate reported each day on Bloomberg screen GBPUSD WMCO Curncy <GO> at approximately 4:00 p.m., London time, or any successor page.
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Country: United Kingdom
Tuesday, Aug 272013, 7:49 AM
Tuesday, Aug 272013, 7:49 AM| 4 Comments
- Moving along with the precious metals over Syrian tension is crude oil, with both WTI crude (USO) and Brent (BNO) up more than 1.6%. WTI at $107.50 per barrel is threatening to take out levels last seen in the Spring of 2011.
- The greenback is also catching a bid, moderately higher against the euro (FXE), cable (FXB), and the loonie (FXC), but sharply higher vs. the aussie (FXA). The dollar is losing a good bit of ground against the yen (FXY), and off just a bit vs. the Swiss franc (FXF).
- Dollar ETFs: UUP, UUPT, UDN, UDNT.
- Related currency ETFs: FXE, ERO, ULE, URR, EUO, DRR, EUFX, GBB, YCL, YCS, JYN.
- Oil ETFs: OIL, USO, DBO, OLO, USL, CRUD, UCO, DTO, SCO, SZO, DNO, UWTI, DWTI, BNO, UOIL, DOIL.
Friday, Aug 232013, 5:22 AM
Thursday, Aug 152013, 4:51 AM
Thursday, Aug 152013, 4:51 AM| Comment!
- U.K retail sales +1.1% on month in July vs +0.2% in June and vs consensus of +0.6%.
- On year, sales +3% vs +1.9% and 2.5%.
- Excluding fuel, sales +1.1% on month vs +0.3% and +0.6%.
- On year, sales ex fuel +3.1% vs +2.1% and +2.7%.
- "Feedback from supermarkets suggested that the sunny weather boosted sales across a range of products, including food, alcohol, clothing and outdoor items," says the Office for National Statistics.
- The pound zips up vs the dollar and is +0.5% at $1.15572, although the FTSE (-0.35%) shrugs and stays well into the red.
- ETFs - Stocks: FKU, EWU, EWUS, DXPS. Currency: GBB, FXB
Wednesday, Aug 142013, 5:17 AM
Wednesday, Aug 142013, 5:17 AM| Comment!
- As expected, U.K. unemployment 7.8% in April-June vs 7.8% in January-March.
- Average weekly earnings excluding bonus +1.1% vs +1% prior and consensus of +1.1%.
- The number of unemployed -4,000 to 2.51M.
- Inactivity rate 22.3%, virtually unchanged.
- Claimant count -29,200 in July vs -29,400 in June and consensus of -15,000. Claimant count rate 4.3% vs 4.4% in June.
- ETFs - Stocks: FKU, EWU, EWUS, DXPS. Currency: GBB, FXB (PR)
Wednesday, Aug 142013, 4:51 AM
Wednesday, Aug 142013, 4:51 AM| Comment!
- The Bank of England's Monetary Policy Committee voted 8-1 in favor of adopting forward guidance, which includes a proposal not to raise interest rates from 0.5% until unemployment has dropped to 7% from 7.8% currently, subject to conditions related to inflation and financial stability. The vote took place at a meeting earlier this month.
- Martin Weale supported the adoption of forward guidance but voted against the proposition, as he would prefer a shorter-than-proposed time frame for the first inflation knockout. (If it were to be "more likely than not that CPI inflation 18-24 months ahead will be 0.5 percentage points or more above the 2% target.")
- The MPC voted unanimously to keep interest rates at 0.5% and against more quantitative easing.
- The pound spikes vs the dollar and is +0.2% at $1.5479. The FTSE falls further and is -0.4%.
- ETFs - Stocks: FKU, EWU, EWUS, DXPS. Currency: GBB, FXB (PR)
Tuesday, Aug 132013, 5:01 AM
Tuesday, Aug 132013, 5:01 AM| Comment!
- U.K. CPI flat on month in July, as expected, vs -0.2% in June. On year, CPI +2.8%, as expected, vs +2.9%.
- Core CPI +2% on year vs +2.3% and +2.2%.
- Inflation brought lower by falling prices for air tickets, clothes, recreation and culture.
- House price index experiences the biggest rise since 2006, climbing 3.1% vs +2.9% in June and forecasts of +3.6%.
- Relevant ETFs - Stocks: FKU, EWU, EWUS, DXPS; Currency: GBB, FXB (PR)
Wednesday, Aug 72013, 9:41 AM
Wednesday, Aug 72013, 9:41 AM| 2 Comments
- In a major policy change, the Mark Carney-led Bank of England lifts from the Fed playbook - adopting explicit forward guidance as it says it will keep its benchmark rate at 0.5% until the unemployment rate drops below 7% (currently 7.8%). The bank says it doesn't expect this to happen until at least 2016. Like Bernanke, Carney is quick to mention 7% is a threshold, not a trigger - meaning rate hikes are not automatic should unemployment drop below that.
- Copycatting another Fed line, the bank says it stands ready to boost QE (currently dormant) if necessary.
- "We are not at escape velocity," says Carney.
- Meanwhile, traders - who sold cable expecting Carney to immediately boost stimulus upon his arrival at the BOE - continue to cover their shorts. FXB +0.8% today with the pound now buying $1.5475, up from about $1.49 on July 1. Related ETF: GBB.
- By a wide margin, the FTSE 100 is the worst performer across the pond today, off 1%. Related ETF: EWU.
Wednesday, Aug 72013, 6:06 AM
Wednesday, Aug 72013, 6:06 AM| Comment!
- As expected, the Bank of England has provided explicit forward guidance, saying its key lending rate will stay at a record low of 0.5% until the U.K.'s unemployment rate drops to 7% from 7.8% in March-May.
- The BOE also doesn't intend to "reduce the stock of asset purchases financed by the issuance of central bank reserves" until the unemployment threshold is met.
- The Monetary Policy Committee is ready to "undertake further asset purchases" as well if necessary.
- The pound (GBB) initially sank against the dollar but quickly recovered and is now -0.1%. (PR)
Tuesday, Aug 62013, 4:40 AM
Tuesday, Aug 62013, 4:40 AM| Comment!
- U.K. industrial production +1.1% on month in June vs flat in May and consensus of +0.7%. On year, output +1.2% vs -2.3% and +0.6%.
- Manufacturing production +1.9% on month vs -0.7% and +0.9%. On year, output +2% vs -2.9% and +0.9%.
- Sterling (GBB) spikes and is now +0.15% at $1.5377; the FTSE (FKU) climbs a bit as well and is -0.2% after being even lower earlier. (PR)
Monday, Aug 52013, 7:24 AM
Monday, Aug 52013, 7:24 AM| 1 Comment
- The U.K. services sector expanded at its quickest pace for over six-and-a-half years in July as PMI jumped to 60.2 from 56.9 in June.
- New-sales volumes increased at a faster pace as market conditions continued to strengthen; backlogs rose at the sharpest rate since February 2000; business confidence strengthened to the highest level for 15 months.
- "Combined with the manufacturing and construction figures, this is the clearest sign yet that the U.K. economy is experiencing a broad based economic recovery," says David Noble of the Chartered Institute of Purchasing & Supply.
- "The forward-looking elements from the survey point to a further strengthening of GDP in Q3 as the U.K. heads towards 'escape velocity' and self-sustaining economic expansion," says Paul Smith of Markit.
- The pound (GBB) is +0.3% at $1.5345, although U.K. shares (FKU) are flat, having been higher earlier. (PR)
Friday, Aug 22013, 7:23 AM
Friday, Aug 22013, 7:23 AM| Comment!
- U.K. construction PMI soared to its highest level in three years in June, jumping to 57 from 51 in June and destroying consensus of 51.6.
- Residential construction grew at the fastest pace since June 2010 and new orders enjoyed the steepest rise since April 2012.
- Things are so good that suppliers are struggling keep up with demand.
- "The swing back to output growth broadened to include commercial and civil engineering activity during July, although housing construction remains the one thing crucial to the sector’s strong upturn at present," says Markit's Tim Moore.
- "Firms are starting to believe this is the real deal for the recovery, demonstrated by the strongest pace of job creation since December 2011," says David Noble of the Chartered Institute of Purchasing & Supply.
- Sterling (GBB) is +0.2% vs the dollar at $1.515, but the FTSE is -0.2%.
- Other relevant ETFs include FKU, EWU, EWUS, DXPS, FXB (PR)
Thursday, Aug 12013, 7:17 AM
Thursday, Aug 12013, 7:17 AM| Comment!
- The pound (FXB, GBB) shoots higher by about 65 pips after the Bank of England leaves policy unchanged.
- Some had expected the bank - with Governor Mark Carney now settled into the top job - would boost stimulus in some fashion, perhaps adding to the QE program.
- British stocks give up their gains, the FTSE 100 (EWU) back to flat on the session.
Thursday, Jul 252013, 4:36 AMU.K. Q2 GDP preliminary +0.6% on quarter vs +0.3% in Q1 and consensus of +0.6%. On year, GDP +1.4% vs +0.3% and +1.4%. Sterling (GBB) takes a dive and is +0.2% to $1.5341 after being +0.4% prior to the release of the figures. U.K. shares (FKU) stay lower and are -0.3%. (PR) |Thursday, Jul 252013, 4:36 AM| 1 Comment
Thursday, Jul 182013, 4:52 AMAs expected, U.K. retail sales +0.2% on month in June vs +2.1% previously; on year, sales +2.2% vs +2.1% in May and +1.7% consensus. Excluding fuel, sales +0.2% (as forecast) vs +2.1% in May; on year, sales +2.1% vs +2.3% prior and forecasts of +1.6%. The pound (GBB, FXB) spikes against the dollar before falling back a bit and is now -0.1%. (PR) |Thursday, Jul 182013, 4:52 AM| Comment!
Wednesday, Jul 172013, 4:35 AMThe Bank of England's Monetary Policy Committee voted unanimously to keep interest rates at 0.5% at a meeting earlier this month and against more quantitative easing, the minutes show. This was Mark Carney's first vote after becoming BOE Governor. The pound spikes as is +0.4% at $1.5221, while the FTSE takes a dive and is flat after being +0.5% not so long ago. ETFs of interest are FKU, EWU, EWUS, DXPS, GBB and FXB. (PR) |Wednesday, Jul 172013, 4:35 AM| Comment!
Tuesday, Jul 162013, 4:43 AMU.K. CPI -0.2% on month in June vs +0.2% in May and consensus of -0.1%. On year, CPI +2.9% vs +2.7% and +3%. Core CPI +2.3% vs +2.2% and +2.3%. The largest upward contributions to inflation came from motor fuels and clothing & footwear, while the largest drag was air transport. The FTSE (FKU) is flat after being lower earlier, while the pound (GBB) takes a bit of a dive and is -0.25% vs the dollar at $1.5062. (PR) |Tuesday, Jul 162013, 4:43 AM| Comment!