GBP/USD – Pound Slide Continues as Greenback Rebounds

GBP/USD has posted losses in the Tuesday session, following three straight losing sessions. In North American trade, the pair is trading at 1.2430. On the release front, British Halifax HPI declined 0.9%, well off the estimate of +0.2%. In the US, the trade deficit narrowed to $44.3 billion, beating the forecast of $45.0 billion. On the employment front, JOLTS Jobs Openings edged lower to 5.52 million, shy of the estimate of 5.56 million.

The Bank of England held rates at 0.25% last week, but the bank’s Monetary Policy Committee (MPC) may not have been unanimous in the decision. Kristin Forbes, an external member of the committee, said on Tuesday that the BoE should raise rates if the economy remains strong and inflation continues to move higher. Forbes added that the bank should not put a hold on monetary policy as a response to uncertainty over the Brexit process. Forbes’ comments appear to challenge BoE Governor Mark Carney’s stance on monetary policy. Carney is hesitant to raise rates, despite respectable economic numbers, warning that the economy faces troubled waters as Britain maneuvers its way out of the European Union.

President Donald Trump has just started his term, but he continues to create controversy and his protectionist rhetoric is not endearing him to the markets. Moreover, the lack of an economic policy from the new administration is a major source of concern and the the post-election euphoria which sent the markets higher has dissipated. The Federal Reserve, which had trumpeted that it was planning a series of hikes in 2017 (sound familiar?), was more cautious in its recent rate statement and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar. On the other hand, if Trump makes good on his promises to “make America first” and implement protectionist policies, the greenback could lose ground against major currencies.

MPs Reject First Amendments to Brexit Terms

GBP/USD Fundamentals

Tuesday (February 7)

• 3:30 British Halifax HPI. Estimate 0.2%. Actual -0.9%
• 8:30 US Trade Balance. Estimate -45.0B. Actual -44.3B
• 10:00 US JOLTS Job Openings. Estimate 5.56M. Actual 5.50M
• 10:00 US IBD/TIPP Economic Optimism. Estimate 56.2. Actual 56.4
• 15:00 US Consumer Credit. Estimate 20.3B

*All release times are GMT

*Key events are in bold

GBP/USD for Tuesday, February 7, 2017

GBP/USD Febuary 7 at 11:10 EST

Open: 1.2467 High: 1.2486 Low: 1.2345 Close: 1.2430

GBP/USD Technical

• GBP/USD was flat in the Asian session. The pair posted considerable losses in the European session but has partially recovered in North American trade
• 1.2351 is providing support
• 1.2471 is the next resistance line

Further levels in both directions:

• Below: 1.2351, 1.2272 and 1.2143
• Above: 1.2471, 1.2579, 1.2674 and 1.2775
• Current range: 1.2351 to 1.2471

OANDA’s Open Positions Ratio

GBP/USD ratio is showing limited movement in the Tuesday session. Currently, long positions command a majority (58%), 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.