It’s a quiet Monday for GBP/USD, which has showed limited movement since before Christmas. In the North American session, the pair is trading slightly below the 1.23 level. US markets are closed and there are no British or US events on the schedule. On Tuesday, manufacturing reports will be in focus, as the UK releases Manufacturing PMI and the US publishes ISM Manufacturing PMI.
After the stunning Brexit vote in June, there were plenty of jitters in the markets, with gloom-and-doom forecasts for the British economy. However, the UK economy has managed quite well in the interim, posting decent numbers in the third and fourth quarters. The British pound has taken a tumble, however, losing about 18 percent of its value 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 EU is determined to show Britain and other members that leaving the club doesn’t pay. Given the ill will between the sides, negotiations could be difficult and protracted and the pound could be vulnerable to further losses if the negotiations run into trouble.
The Federal Reserve will be back on center stage on Wednesday, with the release of the minutes from the December policy meeting, when the Fed finally raised rates for the first time since December 2015. Analysts will be combing through the minutes, looking for clues as to the Fed’s future monetary policy. The US economy is performing very well, and the markets are hopeful that this continues as Donald Trump takes office. Trump’s economic policies remain sketchy, although he has promised to increase fiscal spending while lowering taxes. If the economy’s positive momentum continues in early 2017, the Fed could be inclined to raise rates another quarter point in order to prevent the economy from overheating. A rate hike would likely lead to broad gains for the US dollar.
Monday (January 2)
- There are no UK or US releases on the schedule
Tuesday (January 3)
- 4:30 British Manufacturing PMI. Estimate 53.3
- 10:00 US ISM Manufacturing PMI. Estimate 53.7
*All release times are EST
* Key events are in bold
GBP/USD for Monday, January 2, 2017
GBP/USD January 2 at 10:50 EST
Open: 1.2334 High: 1.2355 Low: 1.2264 Close: 1.2292
- GBP/USD was flat in the Asian session and posted slight gains in European trade. GBP/USD is flat in the North American session
- 1.2272 is a weak support line
- 1.2351 is the next resistance line
Further levels in both directions:
- Below: 1.2272, 1.2111, 1.1943 and 1.1844
- Above: 1.2351, 1.2471 and 1.2620
- Current range: 1.2272 to 1.2351
OANDA’s Open Positions Ratio
In the Monday session, GBP/USD ratio is showing long positions with a majority (58%). This is 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.