GBP/USD continues to post losses and has lost ground on Thursday session. In North American trade, the pair is trading just under the 1.26 line. On the release front, there are no UK releases on the schedule. In the US, unemployment claims dipped to 258 thousand, matching the forecast. This was a strong improvement from the previous reading in 268 thousand. On Friday, the US releases UoM Consumer Sentiment Index. The markets are expecting the indicator to continue to improve in December, with an estimate of 94.3 points.
British Manufacturing Production was unexpectedly weak in October, posting a decline of 0.9%. This marked the indicator’s largest decline since February. Industrial Production followed suit with a poor reading, dropping 1.3%. Last week’s Manufacturing PMI also softened, posting a reading of 53.4, which was short of the forecast of 54.4. On the Brexit front, legal wranglings continue over the mechanism for Britain’s withdrawal from the European Union. The government has appealed a ruling which says Article 50 cannot be triggered without parliament’s approval. British Prime Minister Theresa May wants to commence Brexit negotiations in March without having to consult parliament. For its part, the European Union has said that if negotiations do start in March, the EU’s target date to reach an agreement is October 2018.
The Federal Reserve meets next week for its monthly policy meeting, the first after Donald Trump’s election as president. The markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and market anticipation of a hike has translated into strong gains for the greenback. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has stated that he plans to increase government spending and cut taxes, which could lead to higher inflation levels. The Fed has indicated that it plans to raise rates gradually in 2017, but this could change once the new administration’s economic policies become clearer.
Thursday (December 8)
- 13:30 US Unemployment Claims. Estimate 258K. Actual 258K
- 15:30 US Natural Gas Storage. Estimate -44B
Friday (December 9)
- 15:00 US Preliminary UoM Consumer Sentiment. Estimate 94.3
*All release times are EST
* Key events are in bold
GBP/USD for Thursday, December 8, 2016
GBP/USD December 8 at 10:45 EST
Open: 1.2627 High: 1.2705 Low: 1.2586 Close: 1.2587
- GBP/USD posted small gains in the Asian session. The pair posted further gains in the European session but has reversed directions in North American trade and has posted sharp losses
- 1.2471 is providing strong support
- 1.2620 was tested in resistance earlier and remains a weak line
Further levels in both directions:
- Below: 1.2471, 1.2351 and 1.2272
- Above: 1.2620, 1.2778, 1.2849 and 1.2946
- Current range: 1.2471 to 1.2620
OANDA’s Open Positions Ratio
GBP/USD ratio is unchanged in the Thursday session. Currently, long positions have a majority (59%), indicative of trader bias towards GBP/USD reversing directions and moving 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.