GBP/USD – Pound Steady After Ending Week on Losses

GBP/USD is showing limited movement in the Monday session. In North American trade, the pair is trading just under the 1.29 line. On the release front, there are no major events on the schedule.

The British economy has managed quite well since the Brexit vote in June 2016, but last week’s PMIs may signal the much-feared economic downturn. PMIs in the manufacturing, construction and services sectors all pointed to slower growth in June, compared to the May readings. The double whammy of the British election and the start of Brexit talks with Europe have increased uncertainty and resulted in a decrease in new orders across the economy. The BoE is divided over whether to raise interest rates in the next few months, and the public disagreements between BoE policy makers over rate policy will not help investor confidence. The May government has a razor-thin majority, and must negotiate a divorce with an angry European Union that does not want to see other members opt to leave the club.  The UK will release key employment numbers on Wednesday, with wage growth and unemployment claims expected to worsen in June.

The US wrapped up last week with key employment numbers, and the data was mixed. Nonfarm Payrolls rebounded in June, climbing to 222 thousand. This easily beat the estimate of 175 thousand and marked a 4-month high. However, wage growth remains soft, as Average Hourly Earnings was unchanged at 0.2%, shy of the forecast of 0.3%. Weak wage growth has remained soft throughout the first half of 2017, despite a tight labor market. With wages remaining stagnant, inflation is also mired at low levels. If inflation does not improve, the Federal Reserve may have second thoughts about a rate hike in December. Currently, the odds of an increase in December have dipped to 47%, as the markets clearly have their doubts that the Fed will press the rate trigger.

 

GBP/USD Fundamentals

Monday (July 10)

  • 10:00 US Labor Market Conditions Index. Actual 1.5
  • 15:00 US Consumer Credit. Estimate 12.1B
  • 19:01 British BRC Retail Sales Monitor

*All release times are EDT

*Key events are in bold

GBP/USD for Monday, July 10, 2017

GBP/USD July 10 at 12:10 EDT

Open: 1.2887 High: 1.2909 Low: 1.2855 Close: 1.2890

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2571 1.2706 1.2865 1.2946 1.3058 1.3121
  • GBP/USD inched higher in the Asian session. The pair posted slight losses in the European session and is steady in North American trade
  • 1.2865 was tested earlier in support and is a weak line
  • 1.2946 is the next resistance line

Further levels in both directions:

  • Below: 1.2865, 1,.2706 and 1.2571
  • Above: 1.2946, 1.3058, 1.3121 and 1.3279
  • Current range: 1.2865 to 1.2946

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is showing short positions with a majority (61%). This is indicative of trader bias towards GBP/USD breaking out 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.