GBP/USD has posted considerable losses on Thursday, erasing the gains from Wednesday. In the North American session, the pair is trading slightly above the 1.32 line. On the release front, it’s a data-heavy day in both the UK and the US. British retail sales declined 0.2%, above the forecast of -0.4%. The Bank of England held rates at 0.25%, but hinted at a November rate cut. In the US, retail sales came in at -0.3%, weaker than the estimate of -0.1%. Unemployment Claims were close to the forecast, and the Philly Fed Manufacturing Index easily beat expectations. On Friday, the US releases CPI and UoM Consumer Sentiment.
As widely expected, the Bank of England held rates at a record low 0.25%. This follows a dramatic quarter-cut point in August, the first such move since 2009. BoE policymakers acknowledged that the UK economy had not softened as much as expected after the Brexit vote. However, the BoE added that it was prepared to cut rates in November if the bank’s August forecast did not improve by that time. In a Reuters poll released on Thursday, most analysts surveyed said they expected a 0.15% cut in November if UK growth remains modest, which would lower rates to just 0.10%. The BoE made no changes to the asset-purchase scheme, after significantly expanding the program in August. Elsewhere, retail sales contracted 0.2% in August. This follows an excellent July reading of a 1.4% gain, compared to a forecast of 0.1%. However, analysts attributed the strong July release to unusually hot summer weather.
With a crucial Federal Reserve policy meeting on September 21, the Fed has imposed a blackout period on public comments from FOMC members. This will allow the markets to digest Thursday’s key releases without being distracted by comments from FOMC members, which have done little to clarify what are Fed’s monetary plans for the remainder of the year. As things currently stand, a September hike has been priced in at 15%, while the likelihood of a December move is 43%. These numbers could drop after unimpressive data from retail sales reports. Retail Sales declined 0.3% in August, marking its first decline in five months. There was no relief from Core Retail Sales, which fell 0.1% and missed expectations. The weak retail sales numbers point to softness in consumer spending, a key driver of economic growth. Next up are consumer inflation and confidence reports, which will be released on Friday. Inflation numbers have been very soft for months, and little change is expected in the August releases.
GBP/USD Fundamentals
Thursday (September 15)
- 4:30 British Retail Sales. Estimate -0.4%. Actual -0.2%
- 7:00 MPC Official Bank Rate Votes. Estimate 0-0-9. Actual 0-0-9
- 7:00 BoE Monetary Policy Summary
- 7:00 BoE Official Bank Rate. Estimate 0.25%. Actual 0.25%
- 7:00 BoE Asset Purchase Facility. Estimate 435B. Actual 435B
- 7:00 MPC Asset Purchase Facility Votes. Estimate 0-0-9. Actual 0-0-9
- 8:30 US Unemployment Claims. Estimate 262K. Actual 260K
- 8:30 US Retail Sales. Estimate -0.1%. Actual -0.3%
- 8:30 US Philly Fed Manufacturing Index. Estimate 1.1. Actual 12.8
- 8:30 US PPI. Estimate 0.1%. Actual 0.0%
- 8:30 US Core Retail Sales. Estimate 0.3%. Actual -0.1%
- 8:30 US Core PPI. Estimate 0.1%. Actual 0.1%
- 8:30 US Current Account. Estimate -120B. Actual -120B
- 8:30 US Empire State Manufacturing Index. Estimate -0.9. Actual -2.0
- 9:15 US Capacity Utilization Rate. Estimate 75.8%.
- 9:15 US Industrial Production. Estimate -0.2%.
- 10:00 US Business Inventories. Estimate 0.1%
- 10:30 US Natural Gas Storage. Estimate 57B
Upcoming Key Events
Friday (September 16)
- 8:30 US CPI. Estimate 0.1%
- 8:30 US Core CPI. Estimate 0.2%
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 91.0
*All release times are EDT
* Key events are in bold
GBP/USD for Thursday, September 15, 2016
GBP/USD September 15 at 9:15 EDT
Open: 1.3261 High: 1.3269 Low: 1.3183 Close: 1.3212
GBP/USD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.2899 | 1.3033 | 1.3142 | 1.3219 | 1.3327 | 1.3480 |
- GBP/USD was flat in the Asian session. The pair has been marked by choppy trading in the European session and has posted small gains early in North American trade
- 1.3142 is providing support
- 1.3219 was tested earlier in resistance and could break in the North American session
Further levels in both directions:
- Below: 1.3142, 1.3033 and 1.2899
- Above: 1.3219, 1.3327, 1.3480 and 1.3667
- Current range: 1.3142 to 1.3219
OANDA’s Open Positions Ratio
GBP/USD ratio is showing little movement on Thursday. Currently, long positions have a majority (54%), indicative of trader bias towards GBP/USD continuing to move 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
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