The British pound has posted considerable gains on Tuesday, continuing the upward movement which marked the Monday session. Currently, GBP/USD is trading slightly below the 1.32 line. On the release front, British CBI Industrial Order Expectations declined 5 points, above expectations. The US will release New Home Sales, with the indicator expected to drop to 575 thousand. On Wednesday, the US publishes additional housing data, with the release of Existing Home Sales. The estimate for the July report stands at 5.55 million.
The Brexit referendum vote to leave the European Union in June shook up the financial markets and sent the pound plunging to 30-year lows. Ever since then, there has been widespread concerns that “hard” UK data in the third quarter would point to a sputtering British economy, possibly even point a recession. However, July releases across sectors looked sharp, as inflation, employment and retail sales all beat their estimates. The pound responded with strong gains last week, climbing 1.2 percent. The rally has continued this week, as the pound has flirted with the 1.32 line on Tuesday and is at its highest level since August 4. On Friday, the UK releases GDP Second Estimate, a key economic report card for the economy. If the indicator matches or beats the forecast, the pound could gain more ground.
Central bank heads and other senior policy makers will meet at the annual summit in Jackson Hole, beginning on Thursday. The markets will be looking for hints from Federal Reserve chair Janet Yellen regarding the Fed’s monetary plans, particularly the timing a rate hike. FOMC members are expected to express their views ahead of the key meeting. Fed Vice Chairman Stanley Fischer took the opportunity and sounded upbeat about the US economy, saying that the Fed was close to its aims of a full labor market and the inflation target of 2 percent. The latter claim sounds a bit optimistic, considering that US inflation levels have consistently been closer to zero than the 2 percent level. It will be interesting to see if Janet Yellen follows suit and expresses satisfaction with current inflation levels.
Tuesday (August 23)
- 6:00 British CBI Industrial Order Expectations. Estimate -9. Actual -5
- 14:00 US New Home Sales. Estimate 575K
- 14:00 US Richmond Manufacturing Index. Estimate 6 points
Wednesday (August 24)
- 14:00 US Existing Home Sales. Estimate 5.55M
*All release times are EDT
* Key events are in bold
GBP/USD for Tuesday, August 23, 2016
GBP/USD August 23 at 9:00 GMT
Open: 1.3132 High: 1.3209 Low: 1.3127 Close: 1.3186
- GBP/USD has posted gains in the Asian and European sessions
- 1.3142 has switched to a resistance role following gains by GBP/USD
- 1.3219 is a weak resistance line
Further levels in both directions:
- Below: 1.3142, 1.3064, 1.2938 and 1.2865
- Above: 1.3219, 1.3327 and 1.3480
- Current range: 1.3142 to 1.3219
OANDA’s Open Positions Ratio
GBP/USD ratio continues to show little movement. Currently, long positions have a majority (57%), indicative of trader bias towards GBP/USD continuing to move upwards.
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.