A sense of caution about the low price of the British pound
2023-07-20
■ The pound has risen 15% against the yen since the beginning of the year, highlighting the strong appreciation of the pound due to high-interest rates.
■ Affected by the price-related indicators announced on the 19th and the Bank of England estimate in the UK, it is highly concerned whether the appreciation of the pound will help.
In July, the pound rose to around 184 yen, the highest level since December 2015. Against the backdrop of the widening interest rate gap between the UK and Japan, the yen's rise rate at the beginning of the year was 15.0%, strengthening its upward trend. Among the currencies of major developed countries, the Swiss franc (14.7%) and the euro (12.0%) are closely followed. The market expects that there will be limited room for interest rate hikes this year. The Canadian dollar (9.6%), the Australian dollar (6.6%), and the United States dollar (6.3%), the New Zealand dollar (5.8%) are starting to move.
On the 11th, the Office for National Statistics (ONS) announced a year-on-year increase of 7.3% in the average weekly wage (excluding bonuses) for March-May, reaching a historic high. In addition, the growth rate of the consumer price index (CPI) in June, announced on the 19th, slowed down from 8.2% year-on-year and 8.7% year-on-year in the previous month. However, the core areas other than energy, food, alcohol, and tobacco grew by 7.1% year-on-year, and the high growth rate since March 1992 has remained unchanged. Bailey the CEO of the Bank of England (BOE) in the UK mentioned that BOE is closely monitoring data on the labor market and service prices, and the Monetary Policy Committee (MPC) is likely to decide on an additional 0.25% or 0.50% interest rate hike on August 3rd. In the financial policy report released at the same time, the CPI plummeted to around 5% by the end of the year, and it is of concern whether there will be any revisions to the May forecast for reaching the BOE target (2.0%) in the second half of 2024.
In the short-term financial market, the policy interest rate will be raised from the current 5.0% to over 6.0% in a staggered manner within the year. However, there are signs of a slowdown in the labor market, such as the deterioration of the unemployment rate to 4.0% from March to May. If price-related indicators such as CPI fall below market expectations, the observation of significant interest rate hikes will subside, spreading a sense of appreciation of the pound. With the efforts of the non-commercial sector of the IMM currency futures market, we have also noticed that the price of the pound has reached a buying level of 58000 notes and a high level since November 2007. He believes that if the pound hits last week's low of 179 yen and 47 cents, the selling of the pound will accelerate, and the high point of 172 yen and 12 cents in October 2022 will expand the downward space for the low price.
■ Affected by the price-related indicators announced on the 19th and the Bank of England estimate in the UK, it is highly concerned whether the appreciation of the pound will help.
In July, the pound rose to around 184 yen, the highest level since December 2015. Against the backdrop of the widening interest rate gap between the UK and Japan, the yen's rise rate at the beginning of the year was 15.0%, strengthening its upward trend. Among the currencies of major developed countries, the Swiss franc (14.7%) and the euro (12.0%) are closely followed. The market expects that there will be limited room for interest rate hikes this year. The Canadian dollar (9.6%), the Australian dollar (6.6%), and the United States dollar (6.3%), the New Zealand dollar (5.8%) are starting to move.
On the 11th, the Office for National Statistics (ONS) announced a year-on-year increase of 7.3% in the average weekly wage (excluding bonuses) for March-May, reaching a historic high. In addition, the growth rate of the consumer price index (CPI) in June, announced on the 19th, slowed down from 8.2% year-on-year and 8.7% year-on-year in the previous month. However, the core areas other than energy, food, alcohol, and tobacco grew by 7.1% year-on-year, and the high growth rate since March 1992 has remained unchanged. Bailey the CEO of the Bank of England (BOE) in the UK mentioned that BOE is closely monitoring data on the labor market and service prices, and the Monetary Policy Committee (MPC) is likely to decide on an additional 0.25% or 0.50% interest rate hike on August 3rd. In the financial policy report released at the same time, the CPI plummeted to around 5% by the end of the year, and it is of concern whether there will be any revisions to the May forecast for reaching the BOE target (2.0%) in the second half of 2024.
In the short-term financial market, the policy interest rate will be raised from the current 5.0% to over 6.0% in a staggered manner within the year. However, there are signs of a slowdown in the labor market, such as the deterioration of the unemployment rate to 4.0% from March to May. If price-related indicators such as CPI fall below market expectations, the observation of significant interest rate hikes will subside, spreading a sense of appreciation of the pound. With the efforts of the non-commercial sector of the IMM currency futures market, we have also noticed that the price of the pound has reached a buying level of 58000 notes and a high level since November 2007. He believes that if the pound hits last week's low of 179 yen and 47 cents, the selling of the pound will accelerate, and the high point of 172 yen and 12 cents in October 2022 will expand the downward space for the low price.