GBP/USD – Pound Shows Little Change as US GDP Jumps

The British pound continues to have an uneventful week. In Wednesday’s North American session, the pair is trading at 1.2914, down 0.04% on the day. On the release front, British Net Lending to Individuals slowed to GBP 4.8 billion, missing the estimate of GBP 5.3 billion. This marked a 3-month low. In the US, Preliminary GDP impressed with a sharp gain of 3.0%, beating the estimate of 2.7%. There was more positive news from the employment front, as ADP Nonfarm Payrolls jumped to 237 thousand, crushing the forecast of 185 thousand. On Thursday, there are a host of key events in the US, led by unemployment claims.

The US economy scored well on its GDP report card on Wednesday. Preliminary GDP (second estimate) for the second quarter was revised to 3.0%, a marked improvement from the first estimate of 2.6%. Consumer confidence and spending remain strong and helped contribute to the strong GDP report, as the economy posted its strongest gain since the first quarter of 2015. However, solid consumer spending has failed to boost inflation, which continues to hover at low levels. The lack of inflation could hamper the Federal Reserve’s plans to raise interest rates, with the likelihood of a rate hike in December standing at just 35%. On the employment front, ADP Nonfarm Payrolls jumped to 237 thousand, marking a 3-month high. The official Nonfarm Payrolls report will be released on Friday, and if this indicator also beats the forecast, it would be a strong signal that the economic momentum has continued into the third quarter.

Have the Brexit negotiations hit a brick wall? Talks have resumed in Brussels, as the two sides are meeting for a third round of talks this week. There are large gaps between the sides, and even the range of topics to be discussed at the onset is in dispute. Britain wants to discuss a future trading relationship with the EU at the same time that points in contention are dealt with, but the Europeans insist on solving the contentious issues first, such as the size of Britain’s bill and the jurisdiction of the European High Court on European citizens living in the UK. With plenty of distrust between the sides, the negotiations could grind to a halt if both sides don’t show greater flexibility.

 

GBP/USD Fundamentals

Wednesday (August 30)

  • 4:30 British Net Lending to Individuals. Estimate 4.8B. Actual 5.3B
  • 4:30 British M4 Money Supply. Estimate 0.4%. Actual 0.5%
  • 4:30 British Mortgage Approvals. Estimate 66K. Actual 69K
  • 8:15 US ADP Nonfarm Employment Change. Estimate 186K. Actual 237K
  • 8:30 US Preliminary GDP. Estimate 2.7%. Actual 3.0%

Upcoming Events

Thursday (August 31)

  • 8:30 US Unemployment Claims. Estimate 237K
  • 8:30 US Personal Spending. Estimate 0.4%
  • 9:45 US Chicago PMI. Estimate 58.7
  • 10:00 US Pending Home Sales. Estimate 0.4%

*All release times are GMT

*Key events are in bold

GBP/USD for Wednesday, August 30, 2017

GBP/USD August 30 at 11:25 EDT

Open: 1.2919 High: 1.2938 Low: 1.2878 Close: 1.2914

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2639 1.2767 1.2865 1.2946 1.3058 1.3159
  • GBP/USD inched higher in the Asian session. The pair has been choppy in European and North American trade
  • 1.2865 is providing support
  • 1.2946 is the next resistance line

Further levels in both directions:

  • Below: 1.2865, 1.2767, 1.2639
  • Above: 1.2946, 1.3058 and 1.3159
  • Current range: 1.2865 to 1.2946

OANDA’s Open Positions Ratio

GBP/USD ratio is showing little change, as long and short positions are evenly split. This is indicative of a lack of trader bias as to what direction GBP/USD will take next.

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.