GBP/USD – Pound Gains Ground as US Consumer Confidence Slides

GBP/USD has posted moderate gains on Tuesday, erasing the losses which marked the Monday session. In North American trade, the pair is trading at 1.2830. On the release front, British Public Sector Net Borrowing posted a debt of GBP 4.4 billion, larger than the estimate of 2.6 billion. In the US, CB Consumer Confidence dropped to 120.3, missing the forecast of 123.7 points. There was better news from the housing and manufacturing sectors. New Home Sales rose to 621 thousand, well above the estimate of 590 thousand. As well, the Richmond Manufacturing Index came in at 20 points, above the forecast of 18 points.

On Monday, European leaders met in Brussels to discuss a united front in the Brexit negotiations. Britain wants any deal to include the financial sector, but the Europeans are working on a draft that would exclude the financial sector unless it is governed by EU rules. There are also likely to be sharp disagreements over the size of Britain’s debt to the EU. For now, the British government is concentrating on the June election, but after that things could get nasty between the UK and the EU. If the Brexit talks run into trouble, that could spell bad news for the British pound.

President Trump will have to reach out to the Democrats in order to avoid a shutdown of the federal government on Saturday. Congress must pass a spending bill which will fund the government until October, but the bill requires the backing of 60 senators. This means that the Republicans (who control 52 seats) will need the support of 8 Democrats. This has led to bipartisan negotiations, and it’s reasonable to expect that these talks could go down to the wire, as both sides try to stick to their positions and try not to blink first. The last shutdown was in 2013, lasting 17 days. Another shutdown would be embarrassing for Trump, as it would start on his 100th day in office and would cast doubts on his ability to push his budget and tax plan through Congress.

GBP/USD Fundamentals

Tuesday (April 25)

  • 4:30 British Public Sector Net Borrowing. Estimate 2.6B. Actual 4.4B
  • 9:00 US HPI. Estimate 0.1%. Actual 0.8%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 5.7%. Actual 5.9%
  • 9:59 US Richmond Manufacturing Index. Estimate 18. Actual 20
  • 10:00 US CB Consumer Confidence. Estimate 123.7. Actual 120.3
  • 10:00 US New Home Sales. Estimate 590K. Actual 621K

*All release times are GMT

*Key events are in bold

GBP/USD for Tuesday, April 25, 2017

GBP/USD April 25 at 11:55 EST

Open: 1.2777 High: 1.2846 Low: 1.2774 Close: 1.2835

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2471 1.2571 1.2706 1.2865 1.2946 1.3058
  • GBP/USD was flat in the Asian session. The pair has posted small gains in the European and North American trade
  • 1.2706 is providing support
  • 1.2865 has weakened in resistance

Further levels in both directions:

  • Below: 1.2706, 1.2571 and 1.2471
  • Above: 1.2865, 1.2946 and 1.3058
  • Current range: 1.2706 to 1.2865

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Tuesday session. Currently, short positions have a majority (56%). This is indicative of trader bias towards GBP/USD reversing directions and moving lower.

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.