It’s been an uneventful week for the pound, which continues to trade quietly in the Friday session. Currently, GBP/USD is trading at 1.2980. On the release front, there a host of releases from the UK and the US. Britain’s current account deficit narrowed to GBP 28.7 billion, while Final GDP posted a gain of 0.7%, edging above the forecast of 0.6%. In the US, Friday’s highlight is UoM Consumer Sentiment, with the markets predicting a strong reading of 90.1 points.
British Final GDP posted a respectable gain of 0.7% in the second quarter. This was slightly higher than Second Estimate GDP, which showed a gain of 0.6%. This release covers the 3-month period up to the Brexit vote in late June, so the real test for the economy will be third quarter GDP. British Current Account also looked solid in the second quarter, as the current account deficit narrowed to 3-month lows. The BoE has sent out the alarm regarding economic fallout from Brexit, but so far British indicators for Q3 have posted stronger numbers than expected. If this positive trend continues into autumn, the British pound, which plunged after the Brexit vote in June, could recover some ground against the dollar.
US Final GDP expanded 1.4% in the second quarter, revised from the preliminary estimate of 1.1%. Consumer spending has been strong, making up for sluggish business investment and weaker demand for US exports. The US consumer is optimistic about the economy, as underscored by recent CB consumer confidence surveys, which have been above the 100-level for two months running. On the labor front, unemployment claims came in at 254 thousand, marking the eighth straight week that jobless claims have come in below the forecast.
The US consumer is feeling good about the economy, according to recent consumer confidence indicators. The CB Consumer Confidence jumped to 104.1 points in September, much higher than the forecast of 98.6 points. This excellent release improved upon a strong August report of 101.1 points. Will the upward trend continue with UoM Consumer Sentiment? Stronger consumer confidence often translates into increased spending by consumers, which is vital for economic growth. If upcoming consumer spending numbers also move higher, the likelihood of a December hike will likely increase. Currently, the markets have priced in a quarter-point hike in December at 48 percent.
Friday (September 30)
- 2:00 British Nationwide HPI. Estimate 0.3%. Actual 0.3%
- 4:30 British Current Account. Estimate -30.5B. Actual -28.7B
- 4:30 British Final GDP. Estimate 0.6%. Actual 0.7%
- 4:30 British Index of Services. Estimate 0.3%. Actual 0.6%
- 4:30 British Revised Business Investment. Estimate 0.5%. Actual 1.0%
- 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
- 8:30 US Personal Spending. Estimate 0.2%. Actual 0.0%
- 8:30 US Personal Income. Estimate 0.2%. Actual 0.2%
- 9:45 US Chicago PMI. Estimate 52.1
- 10:00 US Revised UoM Consumer Sentiment. Estimate 90.1
- 10:00 US Revised UoM Inflation Expectations
*All release times are EDT
* Key events are in bold
GBP/USD for Friday, September 30, 2016
GBP/USD September 30 at 9:10 EDT
Open: 1.2964 High: 1.2992 Low: 1.2936 Close: 1.2977
- GBP/USD has shown limited movement in the Friday session
- 1.2899 is providing support
- There is resistance at 1.3033
Further levels in both directions:
- Below: 1.2899, 1.2778 and 1.2612
- Above: 1.3033, 1.3142, 1.3219 and 1.3327
- Current range: 1.2899 to 1.3033
OANDA’s Open Positions Ratio
GBP/USD ratio is showing little movement in the Friday session, consistent with the lack of activity from GBP/USD. Currently, long positions have a strong majority (74%). This is indicative of trader bias towards GBP/USD continuing to move to higher ground.