GBP/USD – Pound Subdued as British CPI Unchanged at 3.0%

The British pound has ticked higher in the Tuesday session. In North American trade, GBP/USD is trading at 1.3121, up 0.04% on the day. On the release front, British CPI remained unchanged at 3.0%, just below the estimate of 3.1%. Other inflation indicators were also within expectations. In the US, inflation indicators were stronger than expected. PPI gained 0.4%, above the estimate of 0.1%, while Core PPI also came in at 0.4%, beating the forecast of 0.2%.  There are a host of key events on Wednesday. The UK releases wage growth and Claimant Count Change, while the US will publish CPI and retail sales numbers.

The pound is under pressure this week, as the currency dipped below the 1.31 line on Monday and Tuesday. Investors are nervous as Prime Minister May’s leadership is showing large cracks. Two ministers have been forced to resign from May’s cabinet in recent weeks, and Foreign Secretary Boris Johnson has been heavily criticized for comments about a British citizen who is on trial in Iran. May appears to have lost control over her cabinet, with senior ministers openly attacking each other and questioning government policy. On Monday, British media reports said that 40 MPs have signed a letter of no confidence in May’s leadership – a worrisome sign that her days at 10 Downing Street could be numbered.

The Brexit talks remain deadlocked, with large gaps between the sides, such as the size of Britain’s divorce bill. Theresa May’s woes at home haven’t helped matters. Her cabinet remains divided on Brexit policy, with senior ministers quarreling in the open. May hasn’t been able present a coherent Brexit policy to the Europeans or to the voters at home, raising doubts as to whether May can deliver the goods on Brexit. On Monday, Brexit Secretary David Davis said he would introduce legislation that would allow MPs to vote on the final Brexit deal, but lawmakers would not be able to amend the legislation. The UK is scheduled to leave the European Union in March 2019.

 

GBP/USD Fundamentals

Tuesday (November 14)

  • 3:05 US FOMC Member Charles Evans Speaks
  • 4:30 British CPI. Estimate 3.1%. Actual 3.0%
  • 4:30 British PPI Input. Estimate 0.8%. Actual 1.0%
  • 4:30 British RPI. Estimate 4.1%. Actual 4.0%
  • 4:30 British Core CPI. Estimate 2.8%. Actual 2.7%
  • 4:30 British HPI. Estimate 5.2%. Actual 5.4%
  • 4:30 British PPI Output. Estimate 0.3%. Actual 0.2%
  • 5:00 BoE Governor Mark Carney Speaks
  • 5:00 Fed Reserve Chair Janet Yellen Speaks
  • 6:00 US NFIB Small Business Index. Estimate 104.2. Actual 103.8
  • 8:30 US PPI. Estimate 0.1%. Actual 0.4%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.4%

Wednesday (November 15)

  • 4:30 British Average Earnings Index. Estimate 2.1%
  • 4:30 British Claimant Count Charge. Estimate 2.4K
  • 4:30 British Unemployment Rate. Estimate 4.3%
  • 8:30 US CPI. Estimate 0.1%
  • 8:30 US Core CPI. Estimate 0.2%
  • 8:30 US Retail Sales. Estimate 0.2%
  • 8:30 US Core Retail Sales. Estimate 0.0% 
  • 8:30 US Empire State Manufacturing Index. Estimate 25.3

*All release times are GMT

*Key events are in bold

GBP/USD for Tuesday, November 14, 2017

GBP/USD November 14 at 10:50 EDT

Open: 1.3116 High: 1.3130 Low: 1.3072 Close: 1.3121

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2811 1.2904 1.3022 1.3122 1.3224 1.3347

GBP/USD was flat in the Asian session. The pair edged lower in European trade but has recovered in North American trade

  • 1.3022 is providing support
  • 1.3122 is fluid. Currently it is a resistance line.

Further levels in both directions:

  • Below: 1.3022, 1.2904 and 1.2811
  • Above: 1.3122, 1.3224, 1.3347 and 1.3445
  • Current range: 1.3022 to 1.3122

OANDA’s Open Positions Ratio

GBP/USD ratio is showing little movement in the Tuesday session. Currently, long positions have a majority (53%), indicative of trader bias towards GBP/USD breaking out and moving higher.

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.