GBP/USD has shown some movement in the Tuesday session but remains unchanged. In the North American session, the pair is trading at 1.2470. On the release front, BoE Governor Mark Carney testified before Parliament’s Treasury Committee on the central bank’s inflation report. The UK posted a surplus for the first time since July, but the GBP 9.8 billion surplus fell short of the estimate of 14.4 billion. On Wednesday, the UK releases Second Estimate GBP ,with a forecast of 0.6%. In the US, the Federal Reserve will publish the minutes of the January policy meeting.
BoE policymakers were grilled on Tuesday over the central bank’s inflation report. Gertjan Vlieghe, a member of the Monetary Policy Committee, defended the central bank, saying that economic models can never be perfectly accurate. The BoE has come in for sharp criticism after overestimating the damage to the British economy after the Brexit vote in June. The economy has weathered Brexit quite well, but BoE Governor Mark Carney continues to warn that stormy waters lie ahead as Britain prepares to begin negotiations over the terms of its departure from the European Union. Inflation has climbed close to the BoE’s target of 2.0%, but Carney has maintained a neutral stance regarding future interest rate moves.
With Fed Chair Janet Yellen’s giving the US economy a thumbs-up last week, the markets are keen to review the Fed policy minutes, which will be released on Wednesday. Testifying before Congress last week, Yellen noted that inflation is moving towards the Fed’s 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen strongly hinted that a rate hike was imminent, leaving the markets to speculate if the Fed prefers to make a move in March or June. If the US economy stays on track in 2017, analysts expect two or three rate hikes of a quarter-point. At the same time, the Fed wants to take into account the economic stance of the new administration, but this remains an elusive goal. Donald Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump has fired back by bitterly attacking the media, and lost in the mayhem is a clear and coherent economic policy. Although Trump has been in office for just over a month, the perception of a muddled and disoriented White House is creating uncertainty in the markets, and is, as Trump would say, “bad for business”.
Tuesday (February 21)
- 4:30 British Public Sector Net Borrowing. Estimate -14.4B. Actual -9.8B
- 5:00 British Inflation Report Hearings
- 8:50 US FOMC Member Neel Kashkari Speech
- 9:45 US Flash Manufacturing PMI. Estimate 54.7
- 9:45 US Flash Services PMI. Estimate 55.8
- 12:00 US FOMC Member Patrick Harker Speech
Wednesday (February 22)
- 4:30 British Second Estimate GDP. Estimate 0.6%
- 10:00 US Existing Home Sales. Estimate 5.55M
- 14:00 US FOMC Minutes
*All release times are GMT
*Key events are in bold
GBP/USD for Tuesday, February 21, 2017
GBP/USD February 21 at 13:15 EST
Open: 1.2471 High: 1.2481 Low: 1.2401 Close: 1.2466
- GBP/USD was flat in the Asian session. The pair posted slight losses in the European session but recovered in North American trade
- 1.2351 is providing support
- 1.2471 was tested earlier in resistance and is a weak 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 unchanged in the Tuesday session. Currently, long positions have a majority (57%). 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.