GBP/USD – Steady as Dollar Quiet at Start of Week

GBP/USD has inched lower in the Monday session. Currently GBP/USD is trading at 1.2270. On the release front, there are no major events ont the schedule. BOE Deputy Governor Charlotte Hogg will speak at an event in Lincoln and we’ll get a look at BRC Retail Sales. The US will release Factory Orders, with the indicator expected to dip to 1.1%

Will the Fed press the rate trigger next week? Market sentiment continues to heat up regarding a rate move in March, buoyed by strong economic data. Federal Reserve policymakers continue to sound hawkish about a rate move, as the Fed holds its policy meeting on March 15. FOMC members William Dudley and John Williams recently hinted at an imminent hike by the Fed. Dudley said the case for a hike is compelling, while Williams noted that a rate increase will be up for “serious consideration” at the March policy meeting. The markets are taking these statements at face value, sending the odds of a March move soaring upwards. The likelihood of a rate this month has jumped to 80%, compared to 33% just a week ago. Why the huge jump in odds? One reason is that policymakers are now saying they won’t wait for Donald Trump to outline tax reform or other economic packages before making a monetary move. This is a significant departure from a few weeks ago, when the Fed sent out signals that it would stay on the sidelines until it had a clearer picture of the economic stance of the new administration.

The pound’s troubles continue, as the currency trades below the 1.23 line. On Friday, GBP/USD dropped to a low of 1.2214, marking its lowest level since January 17. The pound responded negatively to key PMI reports. Manufacturing and Services PMIs both missed expectations in February. The softer Services PMI indicates more cautious spending by British consumers, who remain concerned about the ramifications of Brexit on the economy and their pocketbooks.

GBP/USD Fundamentals

Monday (March 6)

  • BOE Deputy Governor Charlotte Hogg Speech
  • 10:00 US Factory Orders. Estimate 1.1%
  • 15:00 US FOMC Member Neel Kashkari Speech
  • 19:01 British BRC Retail Sales Monitor

*All release times are GMT

*Key events are in bold

 

GBP/USD for Monday, March 6, 2017

GBP/USD March 6 at 8:10 EST

Open: 1.2298 High: 1.2299 Low: 1.2248 Close: 1.2271

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.1943 1.2033 1.2143 1.2272 1.2351 1.2471
  • GBP/USD was flat in the Asian session and has ticked lower in European trade
  • 1.2143 is providing support
  • 1.2272 is under pressure in resistance. It could break during the North American session

Further levels in both directions:

  • Below: 1.2143, 1.2033 and 1.1943
  • Above: 1.2272, 1.2351, 1.2471 and 1.2579
  • Current range: 1.2143 to 1.2272

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Monday session. Currently, long positions have a majority (65%), indicative of trader bias towards GBP/USD reversing directions 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.

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.