GBP/USD – Pound Edges Up to 1.32 as UK Retail Sales Rebound

The British pound is slightly higher in the Thursday session. In North American trade, GBP/USD is trading at 1.3196, up 0.19% on the day. On the release front, British Retail Sales gained 0.3%, beating the forecast of 0.1%. US key indicators were a disappointment. Unemployment claims jumped to 249 thousand, well above the estimate of 235 thousand. The Philly Fed Manufacturing Index slipped to 22.7 points, short of the forecast of 24.5 points. On Friday, the focus will be on housing data, with the release of Housing Starts and Building Permits.

British retail sales posted a gain of 0.3% in October, rebounding after a sharp decline of 0.8% a month earlier. The news wasn’t all rosy, as retail sales declined at an annualized rate of 0.3%, the first year-to-year decline since 2013. On the employment front, there were no surprises. Wage growth remained steady at 2.2%, but this is well below inflation, which means that the consumer is seeing her purchasing power drop, and weaker consumer spending could hurt the economy. The BoE raised interest rates to 0.50% earlier this month, but this move has yet to push inflation lower. Unemployment is at historical lows, and economists expect the robust labor market to produce higher wages. However, the current situation mirrors what is happening in the US, where the labor market is running at full capacity, but this has not translated into higher wages for workers.

The Brexit talks are at an impasse, with large gaps between the sides, such as the size of Britain’s divorce bill. Britain wants to talk with Europe about a trade deal, but the Europeans are demanding progress on a number of other matters, such as the size of Britain’s divorce bill. The British government remains divided on Brexit policy, with senior ministers quarreling over how to handle Britain’s departure from the EU, which is scheduled for March, 2019. May hasn’t been able present a coherent Brexit policy to the Europeans or to the voters at home, raising doubts as to whether she can deliver the goods on Brexit. Earlier in the week, 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.

 

GBP/USD Fundamentals

Thursday (November 16)

  • 4:30 British Retail Sales. Estimate 0.1%. Actual 0.3%
  • 5:36 British 10-year Bond Auction. Actual 1.34%
  • 8:30 US Unemployment Claims. Estimate 235K. Actual 249K
  • 8:30 US Philly Fed Manufacturing Index. Estimate 24.5. Actual 22.7
  • 8:30 US Import Prices. Estimate 0.4%. Actual 0.2%
  • 9:00 BoE Governor Mark Carney Speaks
  • 9:15 US Capacity Utilization Rate. Estimate 76.3%. Actual 77.0%
  • 9:15 US Industrial Production. Estimate 0.5%. Actual 0.9%
  • 10:00 US NAHB Housing Market Index. Estimate 67. Actual 70
  • 10:30 US Natural Gas Storage. Estimate -15B. Actual -18B
  • Tentative – US FOMC Member Robert Kaplan Speaks
  • 15:45 US FOMC Member Lael Brainard Speaks

Friday (November 17)

  • 8:30 US Building Permits. Estimate 1.25M
  • 8:30 US Housing Starts. Estimate 1.19M
  • All Day – BoE Governor Mark Carney Speaks

*All release times are GMT

*Key events are in bold

GBP/USD for Thursday, November 16, 2017

GBP/USD November 16 at 11:30 EDT

Open: 1.3171 High: 1.3209 Low: 1.3135 Close: 1.3196

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2904 1.3022 1.3122 1.3224 1.3347 1.3445

GBP/USD was flat in the Asian session. The pair posted gains but then retracted in European trade. GBP/USD is flat in North American trade

  • 1.3122 is providing support
  • 1.3224 is a weak resistance line

Further levels in both directions:

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

OANDA’s Open Positions Ratio

GBP/USD ratio is showing slight movement towards short positions. Currently, long positions have a majority (53%), indicative of trader bias towards GBP/USD continuing to gain 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.