GBP/USD – Pound at 1.25 as Markets Eye Key UK Manufacturing Report

GBP/USD posted gains but has retracted in Thursday trading. In the North American session, the pair is trading at 1.2530. On the release front, unemployment claims dipped fell to 234 thousand, well short of the forecast of 249 thousand. On Friday, there are two key events. The UK will release Manufacturing Production while the US publishes UoM Consumer Sentiment.

With the British economy performing respectably and inflation indicators pointing upwards, there is more talk of the Bank of England raising interest rates in 2017. Last week, the Bank of England held rates at 0.25% and the pound lost ground after BoE Governor Mark Carney said that interest rates could move in either direction. However, it’s possible that not all members of the Monetary Policy Committee (MPC) see eye-to-eye with the Governor. Kristin Forbes, an external member of the committee, said on Tuesday that the BoE should raise rates if the economy remains strong and inflation continues to move higher. Forbes added that the bank should not put monetary policy on hold as a response to uncertainty over the Brexit process. For his part, Carney is hesitant to raise rates, despite respectable economic numbers, warning that the economy faces troubled waters as Britain maneuvers its way out of the European Union.

During the US election campaign, Donald Trump hammered away at the ills of the US economy, but was short on specifics as far as remedies. However, he did promise a significant fiscal boost through infrastructure spending and tax cuts. This led to a post-election euphoria in the markets and boosted the US dollar. Fast forward to February, and optimism has been replaced by caution and unease, as Trump continues to entangle himself in controversy, both with US trading partners and at home, with the media and Supreme Court. The markets are disappointed that Trump has not unveiled an economic plan or blueprint, limiting himself to protectionist rhetoric which has sent alarm bells ringing worldwide. On Wednesday, Goldman Sachs forecast that the administration won’t implement tax reform or infrastructure spending before 2018. If so, markets may have to wait a while longer before Trump puts an economy policy in place.

BoE Deputy Governor Says UK Investment Weak in Near Term

GBP/USD Fundamentals

Thursday (February 9)

  • 5:34 British 30-y Bond Auction. Actual 1.86%
  • 8:30 US Unemployment Claims. Estimate 249K. Actual 234K
  • 10:00 US Final Wholesale Inventories. Estimate 1.0%
  • 10:30 US Natural Gas Storage. Estimate -155B
  • 13:01 US 30-y Bond Auction
  • 13:10 US FOMC Member Charles Evans Speaks
  • 13:30 BoE Governor Mark Carney Speech

Friday (February 10)

  • 4:30 British Manufacturing Production
  • 10:00 US UoM Consumer Sentiment. Estimate 97.9

*All release times are GMT

*Key events are in bold

GBP/USD for Thursday, February 9, 2017

GBP/USD February 9 at 11:00 EST

Open: 1.2522 High: 1.2582 Low: 1.2495 Close: 1.2528

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2272 1.2351 1.2471 1.2579 1.2674 1.2775
  • GBP/USD was flat in the Asian session. The pair has posted small gains in the European and North American sessions
  • 1.2471 is providing support
  • 1.2579 is the next resistance line

Further levels in both directions:

  • Below: 1.2471, 1.2351, 1.2272 and 1.2143
  • Above: 1.2579, 1.2674 and 1.2775
  • Current range: 1.2471 to 1.2579

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Thursday session. Currently, long positions command a majority (60%), indicative of trader bias towards GBP/USD continuing to move 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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.