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GBP/USD – Pound Dips to 10-Week Lows, Manufacturing Production Next

The British pound remains under pressure in the Tuesday session, as GBP/USD dipped to a low of 1.2106 before rebounding higher. In North American trade, GBP/USD is trading at 1.2180. On the release front, there are no British releases on the schedule. In the US, JOLTS Jobs Openings edged lower to 5.52 million, shy of the estimate of 5.59 million.

The pound remains under pressure this week. On Tuesday, GBP/USD dipped close to the 1.21 level, its lowest level since late October. The dollar has jumped 2.0 percent since Friday, following strong wage growth in December. Average Hourly Earnings climbed 0.4%, edging above the estimate of 0.3%. This marked a strong turnaround after the November reading of -0.1%. The news was not as bright from Nonfarm Payrolls, which dropped to 156 thousand, well off the estimate of 175 thousand. This marked a 3-month low, but the dollar still posted gains. The slide continued on Monday, following comments from Prime Minister Theresa May in a weekend television interview. May bluntly said that the UK would be unable to keep “bits” of EU membership and added that it was crucial for the UK to maintain its own immigration policy. The markets read her comments as a signal that May was pushing a “hard Brexit” approach, in which the UK would give up access to the EU market in favor of immigration control. May tried to backtrack on Monday, insisting that she was looking for the best deal possible for the UK, which didn’t necessarily mean a “soft” or “hard” Brexit. Still, May hasn’t provided details of an exit strategy, leading to criticism that the government does not have a clear plan to leave Europe. If the government doesn’t provide more details of its Brexit strategy soon, nervous markets could send the pound even lower.

The US released key employment numbers on Friday, and the markets responded with a thumbs-up, which boosted the US dollar. Wages rebounded in December, as Average Hourly Earnings climbed 0.4%, edging above the estimate of 0.3%. This marked a strong turnaround after the November reading of -0.1%. The news was not as bright from Nonfarm Payrolls, which dropped to 156 thousand, well off the estimate of 175 thousand. This marked a 3-month low, but the dollar still posted gains. The unemployment rate edged up to 4.7%, matching the forecast.

May Delivers Another Brexit Blow to Sterling [1]

Sterling Battered on PM May’s Comments [2]

GBP/USD Fundamentals

Tuesday (January 10)

Wednesday (January 11)

*All release times are EST

* Key events are in bold

 

GBP/USD for Tuesday, January 10, 2017

GBP/USD January 10 at 11:20 EST

Open: 1.2169 High: 1.2190 Low: 1.2106 Close: 1.2178

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.1844 1.1943 1.2111 1.2272 1.2351 1.2471

Further levels in both directions:

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Tuesday session. Currently, long positions have a strong majority (68%). This is indicative of trader bias towards GBP/USD breaking out 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.

Kenny Fisher

Kenny Fisher [6]

Market Analyst at OANDA [7]
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

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