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GBP/USD – Pound Shrugs Off US GDP, British Mfg. PMI Next

GBP/USD has shown little movement in the Tuesday session. In North American trade, GBP/USD is trading at 1.2430. In the US, revised GDP remained at 1.9%, shy of the forecast of 2.1%. The CB Consumer Confidence report jumped to 114.8, well above the estimate of 111.1 points. As well, President Donald Trump will address a joint session of Congress. In the UK, BoE Deputy Governor-Designate Charlotte Hogg testified before the Treasury Select Committee. Later in the day, the UK releases the BRC Shop Price Index. On Wednesday, both the UK and US releases Manufacturing PMI reports.

The BoE’s incoming deputy governor, Charlotte Hogg, told the treasury committee that Brexit remained the “most significant challenge” for monetary policymakers, noting that consumer spending could drop more sharply than forecast by the BoE. The British economy has weathered the Brexit storm fairly well, but BoE Governor Mark Carney continues to warn that Britain’s departure from the EU will take a toll on the economy, and his cautious stance was echoed by BoE Chief Economist Andy Haldane last week. Haldane warned that a sharp increase in market expectations for an interest rate could hurt the “fragile” economy. Haldane also expressed support for Carney’s neutral stance over interest rate movement. Although inflation levels have risen and are close to the BoE’s target of 2 percent, Carney has signaled that the BoE is in no rush to raise interest rates. Higher rates would boost the weak British pound, which has dropped a whopping 17 percent since the Brexit vote back in June 2016.

It’s crunch time for Donald Trump later on Tuesday. The president delivers his first speech before Congress, and the speech could have huge ramifications for the financial markets. Since Trump’s stunning election upset, the stock markets are sharply higher, but the markets will be expecting some details about Trump’s economic agenda. Trump recently promised to unveil a “phenomenal” tax reform package and significant spending on infrastructure, but hasn’t provided any details. Tuesday’s speech marks a critical opportunity for the new administration, which is still trying to find its bearings after a rocky first month. If Trump fails to present specifics in terms of numbers or at least provide some timelines, market sentiment will likely sour and this could hurt the US dollar.

Trump Speech Could Make or Break the Market Rally [1]

Inflation Weighs on UK Consumer Spending Plans [2]

GBP/USD Fundamentals

Tuesday (February 28)

Upcoming Key Events

Wednesday (March 1)

*All release times are GMT

*Key events are in bold

GBP/USD for Tuesday, February 28, 2017

GBP/USD February 28 at 11:30 EST

Open: 1.2437 High: 1.2470 Low: 1.2404 Close: 1.2426

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2143 1.2272 1.2351 1.2471 1.2579 1.2674

Further levels in both directions:

OANDA’s Open Positions Ratio

GBP/USD ratio has shown limited movement this week. Currently, long positions have a majority (62%), 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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