The British pound remains under pressure in the Tuesday session, as GBP/USD dipped to a low of 1.2106 before rebounding higher. In North American trade, GBP/USD is trading at 1.2180. On the release front, there are no British releases on the schedule. In the US, JOLTS Jobs Openings edged lower to 5.52 million, shy of the estimate of 5.59 million.
The pound remains under pressure this week. On Tuesday, GBP/USD dipped close to the 1.21 level, its lowest level since late October. The dollar has jumped 2.0 percent since Friday, following strong wage growth in December. Average Hourly Earnings climbed 0.4%, edging above the estimate of 0.3%. This marked a strong turnaround after the November reading of -0.1%. The news was not as bright from Nonfarm Payrolls, which dropped to 156 thousand, well off the estimate of 175 thousand. This marked a 3-month low, but the dollar still posted gains. The slide continued on Monday, following comments from Prime Minister Theresa May in a weekend television interview. May bluntly said that the UK would be unable to keep “bits” of EU membership and added that it was crucial for the UK to maintain its own immigration policy. The markets read her comments as a signal that May was pushing a “hard Brexit” approach, in which the UK would give up access to the EU market in favor of immigration control. May tried to backtrack on Monday, insisting that she was looking for the best deal possible for the UK, which didn’t necessarily mean a “soft” or “hard” Brexit. Still, May hasn’t provided details of an exit strategy, leading to criticism that the government does not have a clear plan to leave Europe. If the government doesn’t provide more details of its Brexit strategy soon, nervous markets could send the pound even lower.
The US released key employment numbers on Friday, and the markets responded with a thumbs-up, which boosted the US dollar. Wages rebounded in December, as Average Hourly Earnings climbed 0.4%, edging above the estimate of 0.3%. This marked a strong turnaround after the November reading of -0.1%. The news was not as bright from Nonfarm Payrolls, which dropped to 156 thousand, well off the estimate of 175 thousand. This marked a 3-month low, but the dollar still posted gains. The unemployment rate edged up to 4.7%, matching the forecast.
Tuesday (January 10)
- 6:00 US NFIB Small Business Index. Estimate 99.6. Actual 105.8
- 10:00 US JOLTS Job Openings. Estimate 5.59M. Actual 5.52M
- 10:00 US Final Wholesale Inventories. Estimate 0.9%. Actual 0.2%
Wednesday (January 11)
- 4:30 British Manufacturing Production. Estimate 0.6%
*All release times are EST
* Key events are in bold
GBP/USD for Tuesday, January 10, 2017
GBP/USD January 10 at 11:20 EST
Open: 1.2169 High: 1.2190 Low: 1.2106 Close: 1.2178
- GBP/USD showed limited movement in the Asian and European sessions. The pair has posted gains in the North American session
- 1.2111 is providing weak support
- 1.2272 is the next resistance line
Further levels in both directions:
- Below: 1.2111, 1.1943 and 1.1844
- Above: 1.2272, 1.2351, 1.2471 and 1.2620
- Current range: 1.2111 to 1.2272
OANDA’s Open Positions Ratio
GBP/USD ratio is unchanged in the Tuesday session. Currently, long positions have a strong majority (68%). This is indicative of trader bias towards GBP/USD breaking out and moving upwards.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.