GBP/USD has edged lower in the Wednesday session. In North American trade, the pair is trading at 1.2460. On the release front, the BoE released its Financial Stability report, with the bank noting concerns over expected higher interest rates in the US and fallout from Brexit. The BOE also release its stress test for the country’s major banks. The Royal Bank of Scotland (RBS) failed the test, but has already approved a new capital plan submitted by RBS.
In the US, ADP Nonfarm Employment Change jumped to 216 thousand, well above the forecast of 161 thousand. On Thursday, the UK will publish Manufacturing PMI, while the US releases unemployment claims and the ISM Manufacturing PMI.
The Bank of England released its Financial Stability report, with the bank warning that the financial sector faces a challenging environment. The bank expressed its uneasiness over Donald Trump’s election as US president. The report said that “[t]he US election has reinforced existing vulnerabilities,”, such as a weak global economy and the high levels of debt affecting emerging market economies. Trump has said he will increase infrastructure spending and cut taxes, and the BoE is worried that this could lead to higher global inflation. In a follow-up press conference, BoE Governor Mark Carney said that Trump’s protectionist declarations could throw “sand in the gears” of the global economy and have adverse repercussions on the UK economy. The report also noted a warning about fallout from Brexit, saying it was essential that an “orderly transition” take place when Britain leaves the European Union.
US indicators impressed on Tuesday. Preliminary GDP sparkled in the third quarter, as the economy expanded 3.2%, above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. Solid consumer confidence numbers have been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.
Wednesday (November 30)
- All Day – OPEC Meetings
- 2:00 UK Bank Stress Test Results
- 2:00 BoE Financial Stability Report
- 2:00 BoE FPC Statement
- 8:15 US ADP Nonfarm Employment Change. Estimate 161K. Actual 216K
- 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
- 8:30 US Personal Spending. Estimate 0.5%. Actual 0.3%
- 8:30 US Personal Income. Estimate 0.4%. Actual 0.6%
- 9:45 US Chicago PMI. Estimate 52.1. Actual 57.6
- 10:00 US Pending Home Sales. Estimate 0.3%. Actual 0.1%
- 10:30 US Crude Oil Inventories. Estimate 0.7M. Actual -0.9M
- 11:45 US FOMC Member Jerome Powell Speech
- 14:00 US Beige Book
Upcoming Key Events
Thursday (December 1)
- 4:30 British Manufacturing PMI. Estimate 54.4
- 8:30 US Unemployment Claims. Estimate 252K
- 10:00 US ISM Manufacturing PMI. Estimate 52.1
*All release times are EST
* Key events are in bold
GBP/USD for Wednesday, November 30, 2016
GBP/USD November 30 at 10:05 EST
Open: 1.2489 High: 1.2515 Low: 1.2413 Close: 1.2455
- GBP/USD was flat in the Asian session and showed choppiness in European trade. Early in the North American session, the pair has posted slight gains
- 1.2351 is providing support
- 1.2471 remains busy and has switched to a resistance role. It is a weak line
Further levels in both directions:
- Below: 1.2351, 1.2272 and 1.2120
- Above: 1.2471, 1.2620, 1.2778 and 1.2849
- Current range: 1.2351 to 1.2471
OANDA’s Open Positions Ratio
GBP/USD ratio remains unchanged this week. Currently, long positions have a majority (61%), indicative of trader bias towards GBP/USD reversing directions and gaining ground.