GBP/USD – Pound Slide Continues as US Jobs Report Beats Forecast

The British pound has posted slight losses in the Wednesday session, continuing the downward movement we’ve seen for most of the week. In North American trade, GBP/USD is trading at 1.3384, down 0.44% on the day. On the release front, there are no British events on the schedule. In the US, ADP Nonfarm Employment Change slowed to 190 thousand, just above the forecast of 189 thousand. On Thursday, the US releases unemployment claims.

The ADP nonfarm employment report came in as expected, with a gain of 190 thousand. Still, this was a soft reading compared to the previous release, which showed a gain of 235 thousand. Investors are, of course, much more interested in the official nonfarm employment change release, which takes place on Friday. Again, the markets are expecting a soft landing, with a forecast of 200 thousand, down from 261 thousand in the October release. If nonfarm payrolls, one of the most important indicators, is weaker than expected, the US dollar could lose ground. The US will also release a wage growth report on Friday, with the markets expecting a gain of 0.3%.

The Brexit talks are back in the spotlight, but unsurprisingly, there remain plenty of bumps on the road. There had been hopes of a major announcement following a meeting between Prime Minister May and European Commission President Jean-Claude Juckner. However, these expectations were left on hold, as it became apparent that wide gaps remain on two key issues – Northern Ireland and the European Court of Justice. The European Union is willing to let EU rules apply to Northern Ireland, but the small DUP party, which is keeping the May government afloat, is against any steps which could be seen as moving the north and the republic of Ireland closer to unification. A solution that will satisfy the UK, the EU and the DUP over the Irish border remains elusive. Another thorny issue issue is whether the European Court of Justice will apply to European citizens in the UK after Brexit. While the EU is in favor of the court having authority over these citizens, many British lawmakers feel that such a move would undermines British sovereignty. The EU holds a key summit on December 12, and May, who is facing pressure at home over her handling of Brexit, is anxious to wrap up the non-trade issues and move on to trade negotiations as quickly as possible.

DUP Stands Firm on Brexit Deal

GBP/USD Fundamentals

Wednesday (December 6)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 189K. Actual 190K
  • 8:30 US Revised Nonfarm Productivity. Estimate 3.3%. Actual 3.0%
  •  8:30 US Revised Unit Labor Costs. Estimate +0.2%. Actual -0.2%
  • 9:59 US IBD/TIPP Economic Optimism. Estimate 54.6. Actual 51.9
  • 10:30 US Crude Oil Inventories. Estimate -3.2M. Actual -5.6M

Thursday (December 7)

  • 8:30 US Unemployment Claims. Estimate 241K

*All release times are GMT

*Key events are in bold

GBP/USD for Wednesday, December 6, 2017

GBP/USD December 6 at 11:35 EDT

Open: 1.3444 High: 1.3446 Low: 1.3358 Close: 1.3384

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3035 1.3186 1.3321 1.3402 1.3503 1.3655

GBP/USD showed little movement in the Asian session. The pair lost ground in European trade and has steadied in the North American session

  • 1.3321 is providing support
  • 1.3402 has switched to a resistance role after losses by GBP/USD on Wednesday

Further levels in both directions:

  • Below: 1.3321, 1.3186 and 1.3035
  • Above: 1.3402, 1.3503, 1.3655 and 1.3809
  • Current range: 1.3321 to 1.3402

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Wednesday session. Currently, short positions have a majority (55%), indicative of trader bias towards GBP/USD continuing to move lower.

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.