GBP/USD is showing little movement in the Wednesday session. In North American trade, the pair is trading at 1.2530. On the release front, British HPI declined 0.9%, well off the forecast of +0.2%. In the US, there are no major events on the schedule. Crude Oil Inventories posted a huge gain of 13.8 million barrels, crushing the estimate of 2.7 million. On Thursday, the US releases the weekly unemployment claims report, which is expected to rise to 249 thousand.
Which way are interest rates headed in Britain? Last week, the Bank of England held rates at 0.25% last week and the pound lost ground after BoE Governor Mark Carney said that interest rates could move in either direction. However, it’s possible that not all members of the Monetary Policy Committee (MPC) see eye-to-eye with the Governor. 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 monetary policy on hold as a response to uncertainty over the Brexit process. For his part, 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 continues to create controversies on an almost daily basis, and his brash and undiplomatic style has not endeared 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, 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.
Wednesday (February 8)
- 3:30 British Halifax HPI. Estimate 0.2%. Actual -0.9%
- 10:30 US Crude Oil Inventories. Estimate 2.7M. Actual 13.8M
- 13:01 US 10-y Bond Auction
Thursday (February 9)
- 8:30 US Unemployment Claims. Estimate 249K
*All release times are GMT
*Key events are in bold
GBP/USD for Wednesday, February 8, 2017
GBP/USD February 8 at 11:20 EST
Open: 1.2495 High: 1.2550 Low: 1.2472 Close: 1.2527
- GBP/USD was flat in the Asian session. The pair has posted small gains in the European and North American sessions
- 1.2471 is providing support
- 1.2579 is the next resistance line
Further levels in both directions:
- Below: 1.2471, 1.2351, 1.2272 and 1.2143
- Above: 1.2579, 1.2674 and 1.2775
- Current range: 1.2471 to 1.2579
OANDA’s Open Positions Ratio
GBP/USD ratio is unchanged in the Wednesday session. Currently, long positions command a majority (60%), indicative of trader bias towards GBP/USD continuing to move upwards.
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