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GBP News
BoE Sees Rapid Fall In Unemployment Rate; Upbeat On Economy
Bank of England Governor Mark Carney said the U.K. unemployment rate is likely to reach the threshold more rapidly than expected in the light of a strong economic recovery, which has added to market expectations of an early interest rate hike. Nonetheless, he emphasized that the fall in jobless rate to 7 percent will not trigger an automatic rate revision.
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UK House Prices Dip 2.4% In November - Rightmove
The average asking price for a house in the United Kingdom was down 2.4 percent in November, property tracking website Rightmove said on Monday - standing at 246,237 pounds.
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UK House Prices Fall In November
Average asking prices of a property in the U.K. declined in November in line with the usual pre-Christmas trend, a monthly survey by Rightmove revealed Monday. Prices fell 2.4 percent on a month-on-month basis, following a 2.8 percent surge in October. However, compared with an average November fall over the last three years, this year's drop was slightly more muted.
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Bank Of England cuts Mortgage Support To Avoid Housing Bubble
(Reuters) - The Bank of England moved to head off the risk of a bubble in house prices on Thursday, making a surprise announcement that it would put the brakes on a scheme launched last year to boost mortgage lending.
Shares in British construction firms tumbled after the central bank said it would refocus the Funding for Lending Scheme (FLS) on helping small firms that find it hard to borrow.
Britain's economy and its housing market have staged an unexpectedly strong turnaround since FLS was launched by the BoE and finance ministry in July 2012 to spur lending to home-buyers and businesses.
Another, much-criticized, government program to aid the housing market, Help to Buy, remains in place.
"We did not see an immediate threat coming from the housing market but we are concerned about the prospective evolution of the housing market," BoE Governor Mark Carney said.
"The concern is where this could go. We definitely see some short-term momentum," he said, adding the BoE was prepared to take "larger measures" to tame rising house prices if needed.
Carney said it would "no longer be appropriate or necessary for us to have our foot on the accelerator" in terms of spurring mortgage lending. "It's better to shift into neutral."
Sterling rose after the announcement, while construction firms lost more than 1 billion pounds ($1.63 billion) in value. Barratt Developments, Britain's biggest housebuilder by volume, saw its shares slump by as much as 9.6 percent.
Finance minister George Osborne said he backed the changes to the FLS scheme.
British house prices are likely to rise nearly 6 percent in 2014 on top of a similar a increase this year, according to a Reuters poll of economists published earlier this week.
James Knightley, an economist with ING, said the shift in policy was not a precursor to an interest rate hike by the BoE, which has kept borrowing costs at a record low since 2009.
"Such measures have been undertaken elsewhere, and there the sense is that by taking such action it can actually limit the need for direct monetary policy tightening," Knightley said.
A representative of British mortgage lenders said the industry was well placed to cope without the scheme's support.
"Although the changes to the FLS may be a surprise, they are not a shock. Mortgage lenders are well equipped to meet their funding needs, as wholesale funding market conditions have improved and retail deposits are robust," said Paul Smee, director general of the Council of Mortgage Lenders.
Carney said the changes to the FLS did not have implications for Help to Buy, which aims to lift construction and aid home-buyers without large mortgage deposits, and which the BoE will review next September.
CONCERNS ABOUT CREDIT
Earlier this week Carney faced questions from lawmakers worried that a house price bubble is forming, and that a lack of lending to small firms is hampering Britain's economic recovery.
"We should refocus the FLS so that it continues to support lending to the business sector, without adding further broad support to household lending at a time when that is no longer necessary," Carney said in a letter to Osborne.
Economic growth in the three months to September was the fastest in three years, banks have far easier access to finance, and house prices are rising at their fastest for three years.
Most of the increase in house prices has been concentrated in London and nearby areas, but Carney said price rises now seem to be spreading more broadly across the country.
Under the FLS, banks and building societies can access cheap credit from the BoE in proportion to how much they lift lending.
On Thursday, the BoE said banks would not be able to claim the cheap funding for new lending to households from January 1, 2014, although existing entitlements would not be affected. Fees charged to banks for business finance would be reduced to the lowest point on the existing scale, 0.25 percent.
The BoE also said that favorable capital treatment for new home loans made under the FLS would end on December 31. Five, mainly small, lenders benefit from this at present.
Carney also said he was ready to take further action to cool housing if need be, including recommending a cap on how big mortgages can be relative to property values and borrowers' salaries.
Currently the BoE lacks the power to force banks to follow its recommendations on such caps, but it could instead require banks to hold extra capital against risky lending - another option that it outlined.
Away from housing, the BoE said a stronger economic outlook meant that risks to financial stability appeared lower.
Risks remained, however, as many countries, firms and individuals were highly indebted and vulnerable if a sharp rise in interest rates outpaced any increase in their incomes.
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Bank Of England To Curb FLS Support For Households
The Bank of England will scale back incentives that it provides to banks for lending to households, in a bid to curb mortgage lending and divert credit to businesses. The Funding for Lending Scheme will continue to provide support for lending to businesses in 2014, with incentives in the scheme skewed heavily towards lending to small and medium-sized enterprises.
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U.K. Mortgage Approvals Near 6-Year High; House Price Growth Accelerates
U.K. mortgage approvals increased to the highest level since February 2008 as banks lend more to housing, siphoning away funds from lending to businesses, given the strong confidence in the property market on the back of government scheme. Moreover, house prices registered the strongest growth since July 2010, flagging fears of housing bubble.
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BoE Likely To Keep Rates On Hold Amid Chancellor's Mini-Budget Announcement
The policymakers of Bank of England is all set to hold the interest rates unchanged, as economic indicators underline better prospects for growth and employment. The outcome of the 2-day meeting, which ends on Thursday, is unlikely to gain significant attention as the markets shift their focus to the Chancellor's 2013 Autumn Statement, also due on Thursday.
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U.K. Industrial Output Expands For Second Month; Visible Trade Gap Narrows
British industrial production increased for the second straight month in October, boosting hopes of a strong recovery in the fourth quarter, the Office for National Statistics said Tuesday. Further, the trade data today showed that the visible trade gap narrowed as imports declined more than shipments in October.
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Rightmove Forecasts 8% Increase In UK House Prices Next Year
Asking prices for a property in the U.K. could rise by up to 8 percent next year unless the growing demand is countered by sufficient supply, online real estate portal Rightmove said Monday. The market needs to redress 2013's imbalance of 2 percent rise in new listings versus 13 percent jump in transactions, the firm said in a monthly report.
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UK Consumer Confidence Index Dips In December - GfK
An index measuring consumer sentiment in the United Kingdom was down for the third consecutive month, the latest survey from GfK revealed on Friday - showing a score of -13.
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GBP/USD weekly outlook: December 23 - 27
Monday, December 23
The U.S. is to produce government data on personal spending and expenditure, while the University of Michigan is to release revised data on consumer sentiment and inflation expectations.
Tuesday, December 24
The U.K. is to release industry data on mortgage approvals, an important indicator of demand in the housing market.
The U.S. is to release data on durable goods orders, a leading indicator of production, as well as a report on new home sales.
Wednesday, December 25
Markets in the U.K. and the U.S. will remain closed for the Christmas Day holiday.
Thursday, December 26
Markets in the U.K. will remain closed in observance of Boxing Day.
Meanwhile, the U.S. is to release weekly data on initial jobless claims.
Friday, December 27
The U.S. is to round up the week with a report on crude oil supplies.
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UK House Prices Rise 0.5% In December - Hometrack
The average asking price for a house in the United Kingdom was up 0.5 percent in December compared to the previous month, property tracking website Hometrack said on Monday - after gaining 0.5 percent in November.
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U.K. Needs Extra GBP 25 Bln Spending Cuts After 2015 Election, Osborne Says
The British government should cut spending by another GBP 25 billion over two years after the 2015 general election, Chancellor George Osborne said in a speech in Birmingham on Monday.
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UK Shop Prices Drop 0.8% In December - BRC
Shop prices in the United Kingdom dropped 0.8 percent on year in December, the British Retail Consortium said on Wednesday - falling for the eighth consecutive month.
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U.K. Industrial Production Remains Flat; Construction Output Falls
British industrial output remained flat in November and construction output logged the sharpest decline so far in 2013, confounding recent survey data that underscored robust activity in the fourth quarter. Industrial production remained unchanged in November compared with the previous month, the latest figures from the Office for National Statistics showed Friday.
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UK economic recovery boosts financial firms' profits, jobs - survey
UK Economic Recovery Survey
(Reuters) - Britain's financial services industry is beginning to feel the benefits of economic recovery, as firms report growth in profits, business volumes and optimism in the fourth quarter, according to a survey.
Some 69 percent of firms said they felt more optimistic about the overall business situation versus just 1 percent who felt less optimistic, the quarterly CBI/PwC financial services survey showed on Monday.
The positive balance of 68 percent was the highest since the survey began in 1989.
The survey is based on the balance of firms reporting an increase and those reporting a decrease.
The survey, covering the three months to December of last year, also showed a net 46 percent of firms saw greater business volumes, the best total since June 2007.
Stronger volumes offset a sharp rise in total costs to deliver the fifth consecutive quarter of profit growth, according to the research by the Confederation of British Industry (CBI) lobby group and accounting firm PwC.
Both business volumes and profitability were expected to increase again in the next quarter, the figures showed.
"All the key indicators - optimism, business volumes and profitability - are up. But it's particularly encouraging to see longer term confidence indicators like marketing spend, employment and investment spend also rising strongly," said Matthew Fell, Director for Competitive Markets at the CBI.
Greater confidence has translated into rising headcount, with the survey showing employment growing at its fastest pace since 2007.
The survey authors predict job growth in the first quarter of 2014 will be the strongest since the survey began.
Jobs are expected to increase by 15,000, taking total employment in the sector to 1.16 million, just 52,000 lower than at the end of 2008 when the financial crisis took hold, according to their calculations.
"Things are starting to look more 'normal' after five years of volatility," Fell said.
The changing environment has also altered what businesses see as the main constraints facing them over the next year. Firms are now less concerned about demand and the impact of new regulations and more mindful of skills shortages, systems capacity and increasing competition, the figures show.
A total of 87 banks and other financial firms were questioned as part of the research.
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Optimism In U.K. Financial Services Sector At Record High
As the U.K. economic recovery takes root, it is beginning to feed through to the financial services sector, survey data from the Confederation of British Industry and PricewaterhouseCoopers showed Monday.
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U.K. Unemployment Drops to 7.1% as BOE Threshold Looms
UK Unemployment Drops To 7.1% - Bloomberg
U.K. unemployment fell more than economists forecast to the lowest in almost five years, putting it within touching distance of the 7 percent threshold at which Bank of England officials say they will review borrowing costs.
The unemployment rate measured by International Labour Organization methods declined to 7.1 percent in the three months through November from 7.4 percent in the quarter through October, the Office for National Statistics said in London today. The median forecast of 33 economists was for a decline to 7.3 percent. In December, jobless claims fell 24,000, less than economists had forecast.
The data will add pressure on BOE Governor Mark Carney to reassess his guidance policy, under which the Monetary Policy Committee has said it will consider raising interest rates once joblessness has fallen to 7 percent. With that threshold approaching faster than officials had anticipated, economists say the central bank will refine the flagship policy when it publishes its quarterly Inflation Report on Feb. 12.
“Extended improved economic activity and stronger business confidence have fed through to cause substantial improvement in the labour market in recent months,” Howard Archer, an economist at IHS Global Insight in London, said before the data were released. “We expect the unemployment rate to get down to 7 percent in the second quarter of 2014.”
BOE Guidance
BOE policy makers said they see no need to raise interest rates soon even as they forecast that unemployment will fall to their threshold “materially earlier” than anticipated. The MPC “saw no immediate need to raise bank rate even if the 7 percent unemployment threshold were to be reached in the near future,” it said in the minutes of its Jan. 8-9 meeting, published today.
The pound rose against the dollar after the reports and was trading at $1.6517 as of 9:34 a.m. London time, up 0.2 percent on the day. The 10-year gilt yield rose 4 basis points to 2.87 percent.
Claims Down
The unemployment drop left the ILO jobless rate at its lowest since the first quarter of 2009. Unemployment fell by 167,000 to 2.32 million people in the three months through November compared with the quarter through October, today’s report showed. That’s the biggest drop since October 1997 and the second largest since records began in 1971.
December’s fall in jobless claims, the 14th in a row, compared with the median forecast of 28 economists in a Bloomberg News Survey for a drop of 32,000. In November, jobless claims declined 34,300 instead of the 36,700 drop initially estimated. The claimant-count rate fell to 3.7 percent in December from 3.8 percent in November.
The number of people in work climbed 280,000 to 30.2 million in the quarter through November. Both were records, the ONS said.
Almost one third of economists in a Bloomberg survey this month said the U.K. jobless rate will fall to 7 percent in the first half of the year. Sixty-eight percent said the threshold will be reached in 2014.
Policy Change
Of 33 economists who responded to the question on guidance, 20 said the BOE will change the policy next month, when it publishes new forecasts. Of those, nine expect the central bank to lower the unemployment threshold to 6.5 percent, with the same number forecasting a tweak to the BOE’s language to mimic that of the Federal Reserve.
The Fed made refinements to its guidance in December and pledged not to raise the main interest rate until “well past the time” joblessness falls below its threshold of 6.5 percent.
While U.K. inflation slowed to 2 percent in December, hitting the BOE’s target for the first time in more than four years, today’s ONS report showed that it continues to outpace wage growth. Total weekly pay growth in the three months through November was unchanged at 0.9 percent. Wage growth excluding bonuses quickened to 0.9 percent from 0.8 percent through October.
Narrower Deficit
Separately, the ONS said the budget deficit narrowed to 12.1 billion pounds ($20 billion) last month from 14.2 billion a year earlier. Revenue rose 3 percent to a record, driven by stamp duty on property purchases and value-added tax on sales. Government spending fell 2.6 percent. The median forecast of 22 economists in a Bloomberg News survey was a 14 billion-pound deficit.
The deficit in the first nine months of the year was 96.1 billion pounds compared with 100.9 billion pounds a year earlier. Faster-than-expected growth prompted the Office for Budget Responsibility to cut its borrowing forecast for full fiscal year to 111 billion pounds last month, or 6.8 percent of gross domestic product.
The measure that determines how much the government needs to borrow by selling gilts -- the central government net cash requirement -- was 21.9 billion pounds last month, the report showed.
GBPUSD 30min chart shows about 94pips move right after GBP news annnouncement (Claimant Count Change, MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes, Unemployment Rate) :
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U.K. Jobless Rate Falls To 7.1%; BoE Sees No Immediate Need To Hike Rate
The U.K. unemployment rate fell rapidly to the level close to the central bank's 7 percent threshold for an interest rate hike. But policymakers of the Bank of England said there is no immediate need to raise the interest rate, even if the threshold is reached. The jobless rate dropped more-than-expected to 7.1 percent for the September to November period, just a tad above the BoE's threshold.
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BoE's Weale: Not Very Enthusiastic About Reducing 7% Threshold To 6.5%
Bank of England policymaker Martin Weale said reducing the central bank's unemployment rate threshold of 7 percent to 6.5 percent may not achieve the purpose of forward guidance as that level could also be quickly overtaken by events, a regional British daily reported on Friday.
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U.K. Mortgage Approvals At 6-year High
Mortgage approvals in the U.K. grew less than forecast in December, but the figure was the highest in six years, data released by the Bank of England showed on Thursday.
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British Manufacturing Sector Retains Robust Momentum
U.K. manufacturing sector continued to expand in January, reflecting improvement in output and new orders, survey data from Markit Economics showed Monday. Although the pace of expansion eased from December, the survey indicates a strong start to the economy. The seasonally adjusted Markit/Chartered Institute of Purchasing & Supply Purchasing Managers' Index fell more-than-expected to 56.7.
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UK Construction Sector Expands Most In 6 1/2 Years
The British construction sector expanded at the fastest pace in nearly six-and-half years in January as strong order growth boosted activity across all sectors, with residential building rising to a ten-year high.
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CBI Upgrades U.K. 2014 Growth Outlook
The U.K.'s leading business group on Tuesday upgraded its growth projection as the economy is set to gain strength from business investment amid low borrowing cost and net trade poised to pick up this year. Nonetheless, the Confederation of British Industry expressed concerns about political uncertainty as the nation enters a lengthy election campaign.
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Bank Of England Pledges Low Interest Rate; Signals Hike In 2015
The Bank of England on Wednesday hinted that the interest rates are unlikely to rise anytime soon even as the unemployment rate fell faster than it estimated in August. In the quarterly Inflation Report, released Wednesday, the BoE's Monetary Policy Committee suggested that the interest rate is set to rise only in the second quarter of 2015, in line with current market expectations.
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BoE Not To Raise Rates Until Slack Is Reduced, Carney Says
The Bank of England will hike interest rate only when slack in the economy is used up, Governor Mark Carney said in an interview with the BBC.
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U.K. Inflation Falls Below 2% Target For First Time Since 2009
U.K. consumer price inflation fell below the 2 percent target for the first time since November 2009, giving room for the Bank of England to leave its record low interest rates unchanged for some more time and avoid any rate hike that risks economic recovery. Factory-gate inflation also moderated in January, reflecting decreases in petroleum and pharmaceutical products.
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UK Labour Market Statistics, February 2014
•The percentage of people aged from 16 to 64 who were in work (the employment rate) was 72.1%. The employment rate is up 0.3 percentage points from July to September 2013 and up 0.6 from a year earlier. There were 30.15 million people in employment aged 16 and over, up 193,000 from July to September 2013 and up 396,000 from a year earlier. •The percentage of the economically active population aged 16 and over who were unemployed (the unemployment rate) was 7.2%. The unemployment rate is down 0.4 percentage points from July to September 2013 and down 0.6 from a year earlier. There were 2.34 million unemployed people aged 16 and over, down 125,000 from July to September 2013 and down 161,000 from a year earlier.
Full statistic here
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UK Unemployment Rate Unexpectedly Rises In December
U.K. jobless rate unexpectedly rose in December, the first increase in nearly a year, data released by the Office for National Statistics showed on Wednesday.
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U.K. Jan Retail Sales Fall Most Since April 2012; Budget Surplus Declines
British retail sales declined at the sharpest pace since April 2012 as food store sales weakened notably after Christmas, data from the Office for National Statistics showed on Friday. The budget surplus fell short of expectations in January and remained below last year's level due to a fall in income tax, another report revealed.
GBPUSD M5 : 58 pips price movement by GBP - Retail Sales news event :
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U.K. Unveils New Rules To Supervise Foreign Banks
The Bank of England unveiled new set of rules to supervise branches of foreign investment banks operating in the U.K.
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U.K. Construction Growth Moderates In February
The British construction sector expanded notably in February, but the pace of expansion eased since January as adverse weather conditions disrupted activity, survey data from Markit Economics showed Tuesday.
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UK Shop Prices Drop 1.4% In February - BRC
Shop prices in the United Kingdom were down 1.4 percent on year in February, the British Retail Consortium said on Wednesday.
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BoE Set To Maintain Status Quo Stance
The Bank of England's monetary policy meeting is likely to be a 'non-event', with policymakers expected to pledge a low interest rate regime and refrain from any action that risks recovery. The nine-member rate-setting committee is expected to retain the interest rate at a historic low 0.50 percent and its quantitative easing programme unchanged at GBP 375 billion.
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BoE's Carney Sees More Slack In Economy
Bank of England Governor Mark Carney said there may be more slack in the economy than the bank estimated in February.
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UK House Price Growth Slows In March - Rightmove
The average asking price of a house in the United Kingdom was up 1.6 percent on month in March, property tracking website Rightmove revealed on Monday - slowing from the 3.3 percent gain in February.
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Osborne Names Broadbent As BoE Deputy Governor, IMF's Shafik To New Role
U.K. Chancellor George Osborne has named Ben Broadbent as the Bank of England's deputy governor for monetary policy, replacing Charles Bean, and appointed Nemat Shafik, an International Monetary Fund official, as deputy governor responsible for markets and banking, a newly created role.
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British Unemployment, Claimant Count Fall
British unemployed as well as those claiming unemployment benefits decreased as the number of people in work reached a new record during the three months to January, with economic recovery gaining momentum. The Bank of England early this month kept its monetary policy unchanged after all members thought it inappropriate to tighten, or to loosen, the stance of monetary policy.
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U.K. February Budget Deficit Exceeds Expectations
U.K. budget deficit exceeded expectations in February as expenditure increased more than revenues, official data revealed Friday. Public sector net borrowing excluding interventions increased to GBP 9.3 billion in February compared to GBP 9.2 billion registered a year ago, the Office for National Statistics said. The budget deficit was seen at GBP 8.6 billion.
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U.K. Retail Sales Grow Less Than Forecast
British high street sales grew less than expected in March but sales are forecast to rebound strongly next month, a closely watched survey showed Tuesday.
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