GBP Bulls Refusing To Surrender - FXTM

Never underestimate the resilience of the GBP bulls, their ability to creep out from the woodwork and put up a fight to regain control is admirable. The GBPUSD just received a 40 pip boost following the announcement that UK Services PMI rose to an 8-month high in July. This followed Monday’s 50 pip upturn, after the UK’s latest Markit Construction PMI surpassed expectations.

The news that the UK Services PMI increased to an 8-month high will be domestically looked at favorably for several reasons. Firstly, the UK services sector remains the United Kingdom’s main GDP contributor, which means this release should bode well for the UK’s Q3 GDP. Secondly, the services sector employs around 80% of the UK labour force. This is encouraging for next Wednesday’s UK Jobless Claims data release. A lower UK unemployment rate is seen as a crucial factor guiding the Bank of England’s (BoE) decision to raise interest rates. According to BoE Governor Carney, a UK unemployment rate below 6% might influence the central bank’s decision.

The GBPUSD’s recent decline, which has included 12 days of losses out of a possible 13 trading days have certainly raised a few eyebrows. However, some patience is required here. It is important to bear in mind that due to the escalation of various political tensions which dominated the headlines throughout July, investors became attracted to safe havens, such as the USD. Additionally, UK economic releases were low in volume. The UK data that had been released included UK Mortgage Approvals which rose more than forecast, alongside UK House Prices which increased by around an annualised 10%. The BoE have made it no hidden secret lately that they view the domestic housing sector as one of the largest risks to the UK economy. Therefore, it is understandable for such news to have also contributed to the GBPUSD’s recent decline. 

The majority of the UK’s other fundamentals have performed consistently impressively over the past year, as seen by the latest Construction and Services PMI. If tomorrow’s Industrial and Manufacturing Production data impresses, expect the GBP bulls to start collecting enough momentum to charge again at the BoE’s door, which will likely heap further pressure on Governor Carney to raise interest rates.

Written by Jameel Ahmad, Chief Market Analyst at FXTM.

For more information please visit: Forex Circles

NSE records N19.5b turnover in three days

A TURNOVER of 1.345 billion shares worth N19.580 billion was exchanged in 17,075 deals by investors on the floor of the Nigerian Stock Exchange lastweek, in contrast to a total of 1.778 billion shares valued at N38.103 billion that changed hands in 24,186 deals during the pre ceding week..

   The drop in turnover, may, however, be attributed to the two-day holiday declared by the Federal Government to commemorate the  Eid Ul Fitri celebrations.

   Specifically, the financial services industry (measured by volume) led the activity chart with 1.019 billion shares valued at N9.004 billion traded in 7,704 deals; thus contributing 75.78per cent and 45.98 per cent to the total equity turnover volume and value respectively. 

   The conglomerates industry followed with a turnover of 105.811 million shares worth 696.406 million in 1,262 deals. 

   The third place was occupied by the oil and gas Industry with 88.513 million shares worth N2.692 billion in 3,157 deals.

   Trading in the top three equities namely- Access Bank Plc, Wema Bank Plc and Transnational Corporation Of Nigeria Plc (measured by volume) accounted for 539.349 million shares worth N3.514 billion in 1,654 deals, contributing 40.10per cent and 17.95per cent to the total equity turnover volume and value respectively.

   Also traded during the week were a total of 27,660 units of Exchange Traded Products (ETPs) valued at N613,729.40 executed in 13 deals compared with a total of 516,299 units valued at N10.120 million transacted last week in 17 deals.

   Similarly, 77,480 units of FGN bonds valued at N90.277 million were traded this week in 8 deals compared with a total of 300 units of FGN bonds valued at N349, 812.46 transacted last week in 3 deals.

  The NSE All-Share Index and Market Capitalization depreciated by 0.83per cent to close on Friday at 41,934.40 and N13.847 trillion respectively.

Similarly, all the NSE sector indices depreciated during the week with the exception of the NSE Consumer Goods Index, NSE Oil and Gas Index and NSE Industrial Goods Index that appreciated during the week by 0.14per cent, 3.93per cent and 0.41per cent respectively. Meanwhile, NSE ASeM index closed flat.

27 equities appreciated in prices during the week higher than 26 equities of the preceding week. 

   47 equities depreciated in prices lower than 54 equities of the preceding week, while 126 equities remained unchanged higher than 120 recorded in the preceding week.

Source: Guardian Newspaper

Traditional banks may not exist by 2025 – PwC

A new report by Pricewater-houseCoopers has suggested that between 2025 and 2030, a market economy without banks of the traditional kind may exist.

The report entitled, ‘The future shape of banking’, said the barriers for non-banks to provide ‘core’ banking services had continued to decline.

“However, banks retain some substantial advantages to help them to prevent this from happening: Banks’ brands and reputations remain powerful, shored up by familiarity, experience and regulation,” the report added.

The Head of Financial Services, PwC Nigeria, Mr. Gabriel Ukpeh, was quoted in a statement on Sunday, as saying, “The status quo is no more but the need for banking services remains. Corporate history is full of cautionary tales about incumbency advantage being lost at the turn of technological cycles.

“Banks still have advantages and alternative providers suffer from a lack of trust but to be part of the future, banks need to invest heavily, rediscover and reassert their core role in society, and secure the ongoing support of policymakers.”

According to him, the success of M-Pesa in East Africa has been attributed to speed, convenience of completing transactions and its ability to reach the region’s banked and largely unbanked population in both the urban and rural areas.

M-Pesa offers a branchless banking service; and users a able to complete basic banking transactions without visiting a bank branch, he added.

Ukpeh said similar trends had crystallised in the Nigerian market space with the use of eTranzact’s PocketMoni and Quickteller platforms.

The PwC official said the financial inclusion strategy of the Central Bank of Nigeria, the drive towards a cashless society and its availing opportunities were evidences of changing landscapes and opportunities for a financial sector whose borders were changing with the entry of new players and cultures.

He said, “The biggest danger for banks is if they lose sight of customer transactions to other players in the value chain, thereby also losing insight into customer behaviours and allowing the power of their brands to diminish.

“In April 2014, the Financial Times reported that Facebook was on the verge of securing approval from Ireland’s apex bank to become an ‘e-money’ institution. This would allow Facebook to issue units of stored monetary value that represent a claim against the company.”

He further said, “New non-bank entrants and technological advances will challenge banks’ business models and fundamental change is inevitable. The only question is how much of banks’ traditional territory the new entrants will occupy.

“Banking services will migrate increasingly away from physical, tangible distribution into technology enabled channels. Banks will have to redefine the power of their brands as a less risky and more reliable platform if they are to remain competitive in the fast paced markets of today.”

Source: Punch Newspaper