GBP/USD has lost ground in the Wednesday session, as the pair trades just above the 1.22 line. On the release front, there are only two events on the schedule. In the UK, BBA Mortgage Approvals came in at 40.7 thousand, shy of the estimate of 41.6 thousand. Over in the US, Pending Home Sales posted a sharp decline of 2.5%, well of the estimate of a 0.6% gain. On Thursday, the US will release unemployment claims, with the estimate standing at 277 thousand.
The British economy has weathered the Brexit vote quite well, posting decent numbers in the third and fourth quarters. The British pound has taken a tumble, however, losing about 18 percent since the historic June vote. With Britain and the European Union set to discuss the details of the departure early next year, the markets will be nervously waiting for the negotiations to begin. The discussions are likely to be difficult, with the EU determined to show Britain and other members that leaving the club doesn’t pay. Given the ill will between the sides, negotiations could easily grind to a standstill. Such a scenario would leave Britain in limbo, weakening the economy and sending the wobbly pound down even further.
With 2017 just around the corner, US consumers are brimming with confidence, in what analysts are describing as a post-election surge in optimism. The CB Consumer Confidence report surged in December to 113.7, its highest level since August 2001. This reading comes on the heels of UoM Consumer Sentiment, which climbed to a 12-year high, with a reading of 93.8 points. Clearly, consumers are optimistic that the economy will continue to improve under Donald Trump. Both of these well-respected surveys found that consumers are confident that continuing economic growth will create new jobs and raise incomes. Trump’s economic platform remains short on details, but he has promised to cut taxes while increasing public spending. If Trump manages to implement both of these goals, the US economy could heat up and also help global growth pick up speed. In late November, the OECD revised upwards its 2017 growth projections for the US from 2.1% to 2.3%.
The US economy continues to impress, as underscored by the most recent revision to third quarter GDP. The Final GDP reading of 3.5% beat the estimate of 3.3%. This figure marked an upward revision of the previous GDP estimate of 3.2%. The stellar reading can be attributed to stronger consumer spending and an increase in business investment, and marked the strongest growth rate since the third quarter of 2015. With consumer confidence at high levels and the labor market close to capacity, fourth quarter GDP readings could follow suit with strong numbers.
Wednesday (December 28)
- 4;30 British BBA Mortgage Approvals. Estimate 41.6K. Actual 40.7K
- 10:00 US Pending Home Sales. Estimate +0.6%. Actual -2.5%
Thursday (December 29)
- 8:30 US Unemployment Claims. Estimate 277K
- 11:00 US Crude Oil Inventories
*All release times are EST
* Key events are in bold
GBP/USD for Wednesday, December 28, 2016
GBP/USD December 28 at 10:20 EST
Open: 1.2273 High: 1.2297 Low: 1.2196 Close: 1.2212
- GBP/USD posted slight gains in the Asian session. The pair then reversed directions, posting losses in the European and North American sessions
- 1.2111 is providing support
- 1.2272 is the next resistance line
Further levels in both directions:
- Below: 1.2111, 1.1943 and 1.1844
- Above: 1.2272, 1.2351, 1.2471 and 1.2620
- Current range: 1.2111 to 1.2272
OANDA’s Open Positions Ratio
GBP/USD ratio is unchanged in the Wednesday session. Currently, long positions have a majority (60%), 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.