GBP/USD – Pound Edges Lower, Markets Eye British CPI

The British pound has started the week quietly. In the North American session, the pair is trading at 1.2984, down 0.20% on the day. On the release front, there are no British or US events on the calendar. On Tuesday, the UK releases a host of inflation data, led by CPI. The US will publish retail sales and core retail sales reports.

The crisis between North Korea and the US remains a geopolitical hot spot, but the political temperature is lower this week between Washington and Pyongyang. Last week saw some saber rattling between the two countries, culminating with North Korea threatening to hit Guam with a missile strike. Although both sides are interested in a diplomatic solution, the crisis has unnerved investors, boosting safe-haven assets such as gold and the Japanese yen. Donald Trump has his hands full on the domestic front as well. The White House faced stinging criticism from both Republicans and Democrats, as Trump failed to single out white supremacists for the violence in Charlottesville, Virginia, where one person was killed at a demonstration against far-right marchers.

The British manufacturing sector is showing signs of fatigue, based on a key indicator, Manufacturing Production. The indicator has managed just one gain in 2017, and the June reading of 0.0% is hardly reassuring news. There was no relief from Britain’s trade balance, as the deficit climbed to GBP 12.7 billion in June, marking a three month high. Investors remain concerned about Brexit, and the Bank of England has not shied away from warning that Britain’s departure from the EU will hurt the British economy. One of the buzz words surrounding Brexit is “transition period”, as some politicians have come out in favor of a period between Britain’s departure and post-Brexit rules coming into effect. This would minimize the destabilizing effect of Brexit on financial companies, for example. Last week, BoE Deputy Governor Sam Woods said that “some form of implementation period is desirable”, although he stopped short of providing any specifics. The concept of a transition period could come up in talks between the two sides if the May government decides that it wants a transition period.

UK Ready For Next Phase of Brexit Negotiations

GBP/USD Fundamentals

Monday (August 14)

• There are no British or US events

Upcoming Key Events

Tuesday (August 15)

• 4:30 British CPI. Estimate 2.7%
• 8:30 US Core Retail Sales. Estimate 0.3%
• 8:30 US Retail Sales. Estimate 0.4%

*All release times are GMT

*Key events are in bold

GBP/USD for Monday, August 14, 2017

GBP/USD August 14 at 11:40 EDT

Open: 1.3011 High: 1.3022 Low: 1.2957 Close: 1.2984

GBP/USD Technical

• GBP/USD showed little movement in the Asian session. The pair recorded losses in the European session and is showing little movement in North American trade
• 1.2946 is providing support
• 1.3058 is the next resistance line

Further levels in both directions:

• Below: 1.2946, 1.2865 and 1.2767
• Above: 1.3058, 1.3121, 1.3238 and 1.3347
• Current range: 1.2946 to 1.3058

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged on Monday. Currently, long positions have a majority (57%), 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.