GBP/USD – Pound Quiet at Start of Week, British CPI Next

The British pound is almost unchanged in the Monday session. In the North American session, GBP/USD is trading at 1.3279, down 0.01% since the Friday close. On the release front, there are no major events in the UK or the US. British Rightmove HPI rebounded in October with a gain of 1.2%, marking a 5-month high. In the US, the Empire State Manufacturing Index soared to 30.2 points, easily beating the estimate of 20.3 points. This was the indicator’s highest level since 2009. On Tuesday, the UK releases a host of inflation indicators, led by CPI. The markets are expecting inflation to hit 3.0% in September, up from 2.9% a month earlier.

The Brexit talks are in trouble, as the sides have made little progress after several rounds of negotiations. Prime Minister Theresa May is hopeful of generating some positive momentum, as she meets on Monday with EU Commission President Jean-Claude Juncker and EU chief negotiator Michel Barnier.  The Europeans have insisted that there must be progress on a number of issues, such as Britain’s divorce payment, before they will discuss a trade deal. The EU holds a summit on Thursday, and could announce that they won’t talk trade until next year. Both sides have been talking about the possibility of a ‘hard Brexit’ in which Britain would leave with no deal being reached, but British businesses are dead set against such a scenario, and are pushing for a 2-year interim period to soften the blow of leaving the EU.

PM May Heads for Brussels after Brexit Talks Deadlock

Although the US economy has been performing well and the labor market remains red-hot, inflation numbers remain soft. There was some disappointment in the markets as September CPI and Core CPI narrowly missed their estimates. On the release front, CPI gained 0.5%, short of the estimate of 0.6%. Core CPI posted a small gain of 0.1%, shy of the forecast of 0.2%.  With inflation an important consideration in future rate decisions by the Federal Reserve, investors will be anxiously monitoring how Fed policymakers respond to September’s soft inflation numbers. Also on Friday, US retail sales data was a mix. Core Retail Sales gained 1.0%, above the estimate of 0.9%. However, retail sales were up 1.6%, short of the forecast of 1.7%.

GBP/USD Fundamentals

Sunday (October 15)

  • 19:01 British Rightmove HPI. Actual 1.1%

Monday (October 16)

  • 8:30 US Empire State Manufacturing Index. Estimate 20.3. Actual 30.2
  • Tentative – US Federal Budget Balance. Estimate -1.0B

Tuesday (October 17)

  • 4:30 British CPI. Estimate 3.0%

*All release times are GMT

*Key events are in bold

GBP/USD for Monday, October 16, 2017

GBP/USD October 16 at 10:50 EDT

Open: 1.3304 High: 1.3312 Low: 1.3247 Close: 1.3284

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3022 1.3122 1.3224 1.3347 1.3444 1.3514

GBP/USD was flat in the Asian session. The pair edged higher in the European session and has retracted in North American trade

  • 1.3224 is providing support
  • 1.3347 is the next resistance line

Further levels in both directions:

  • Below: 1.3224, 1.3121, 1.3022 and 1.2904
  • Above: 1.3347, 1.3444, 1.3514 and 1.3655
  • Current range: 1.3224 to 1.3347

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in the Monday session. Currently, long positions have a majority (54%), indicative of trader bias towards GBP/USD breaking out and moving to higher ground.

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.