GBP/USD – Pound Steady, US Jobless Claims Sparkles

The British pound pushed above the 1.23 line earlier on Thursday but was unable to consolidate and has retracted. In the North American session, GBP/USD is trading at 1.2220. On the release front, there are no major events in the UK. Over in the US, unemployment claims were sharp, coming in at 247 thousand. This easily beat the estimate of 266 thousand. The US releases key retail sales and consumer confidence reports on Friday, so traders should be prepared for some movement from GBP/USD.

The US labor market continues to fire on all cylinders, as unemployment claims beat expectations for a second straight week. However, it should be noted that unemployment rolls may be skewed around the Christmas holiday season, so analysts are not reading too much into these unusually low releases. Still, 4-week averages for unemployment claims remain at very low levels, as the employment markets remains close to capacity.

There was plenty of anticipation ahead of Donald Trump’s press conference on Wednesday, but the event quickly turned into a spectacle rather than a platform outlying the president-elect’s plans as president. The markets were hoping to hear some specifics about Trump’s economic policy, but the president-elect didn’t comply. Instead, Trump focused on attacking the media for releasing damaging material on him, and also presented his plan to avoid business conflicts while in office. The markets were clearly disappointed with the theatrics. Although the dollar was broadly lower in the aftermath of the Trump press conference, it has managed to hold its own against the pound.

Fed Officials Up Next After Trump Spooks Markets

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British numbers were a mix on Wednesday. Manufacturing Production posted a gain 1.3%, its strongest gain since April. The markets chose, however, to focus on the Goods Trade deficit, which jumped to GBP 12.2 billion. The pound responded negatively and dropped below the 1.21 line for the first time since October 6. Meanwhile, Mark Carney testified before a parliamentary committee. Carney acknowledged that the British financial sector will face adverse consequences due to Brexit, but argued that the “financial stability risks around that process are greater on the continent than they are for the UK”. Prime Minister Theresa May has stated that she wants to begin negotiations over Britain’s departure from the EU by the end of March, so Brexit is sure to be one of the hot economic topics early in 2017.

GBP/USD Fundamentals

Thursday (January 12)

• 5:34 British 10-year Bond Auction. Actual 1.16%
• 8:30 US Unemployment Claims. Estimate 266K. Actual 247K
• 8:30 US FOMC Member Charles Evans Speech
• 8:30 US FOMC Member Patrick Harker Speech
• 8:30 US Import Prices. Estimate 0.8%. Actual 0.4%
• 10:30 US Natural Gas Storage. Estimate -150B. Actual -151B
• 13:01 US 30-year Bond Auction
• 14:00 US Federal Budget Balance. Estimate 21.0B
• 19:00 Federal Reserve Chair Janet Yellen Speech

Friday (January 13)

• 8:30 US Core Retail Sales. Estimate 0.5%
• 8:30 US PPI. Estimate 0.1%
• 8:30 US Retail Sales. Estimate 0.5%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.6

*All release times are EST

* Key events are in bold

GBP/USD for Thursday, January 12, 2017

GBP/USD January 12 at 11:15 EST

Open: 1.2208 High: 1.2317 Low: 1.2167 Close: 1.2223

GBP/USD Technical

• In the Asian session, GBP/USD lost ground but recovered. The pair posted considerable gains European trade but has retracted in the North American session
• 1.2111 is providing support
• 1.2272 is the next resistance line

Further levels in both directions:

• Below: 1.2111, 1.1943, 1.1844 and 1.1559
• Above: 1.2272, 1.2351 and 1.2471
• Current range: 1.2111 to 1.2272

OANDA’s Open Positions Ratio

GBP/USD ratio remains unchanged this week. Currently, long positions have a strong majority (68%). This is indicative of trader bias towards GBP/USD continuing to move 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.