- MarketPulse - https://www.marketpulse.com -

GBP/USD – Pound Slightly Higher, British GDP Ahead

GBP/USD has posted gains in the Thursday session. In North American trade, the pair is trading at 1.2460. On the release front, there is just one British event. BBA Mortgage Approvals climbed to 40.9 thousand, marking a five-month high. US markets are closed for the Thanksgiving holiday, so there are no US events on the schedule. On Friday, the UK will release Second Estimate GDP, with the estimate standing at 0.5%.

On Wednesday, all eyes were on the Autumn Forecast Statement, which essentially is a mini-UK budget. This marked the first budget since the Brexit vote back in June. The pound has plunged 16 percent in that period, but the economy has weathered the post-Brexit period fairly well, consistently putting up numbers which have beaten expectations. However, there are serious concerns that the actual exit from European Union will take a heavy toll on the British economy. The Autumn Statement appears to reflect these worries, as the Office for Budget Responsibility (OBR) revised downwards its growth forecasts for 2016 and 2017. The 2017 forecast was revised from 2.2% to 1.4% and the 2018 forecast from 2.1% to 1.7%. However, GDP in 2016 is expected to edge up to 2.1%, compared to the previous forecast of 2.0%. As well, the government has shelved its plan for a budget surplus in 2019-2020, saying it is aiming for a balance budget “as early as possible”.

The US dollar has been on an impressive role since Donald Trump won the US election earlier this month. With a Fed rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, Trump’s economic policy remains a mystery, so what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election platforms of increased spending and less taxes have been short on content and we will have to wait for the new Trump administration to unveil a detailed economic platform. Where does this leave the Federal Reserve? The Fed is in favor of gradual rate hikes next year, but this assumes that the US economy continues to strengthen. In testimony before a congressional committee last week, Fed chair Janet Yellen acknowledged the uncertainty created by Trump’s victory and said that the Fed might have to adjust its outlook, based on the new president’s economic policies.

GBP/USD Fundamentals

Thursday (November 24)

Friday (November 25)

*All release times are EST

* Key events are in bold

GBP/USD for Thursday, November 24, 2016

GBP/USD November 24 at 11:10 EST

Open: 1.2425 High: 1.2495 Low: 1.2401 Close: 1.2465

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2120 1.2272 1.2351 1.2479 1.2620 1.2778

Further levels in both directions:

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Thursday session. Currently, long positions have a majority (62%). This is indicative of trader bias towards GBP/USD reversing directions and 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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all [4])