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GBP/USD – Pound Higher as Trump Threatens Currency Manipulators

GBP/USD has posted gains in Thursday trading and pushed above the 1.25 line earlier in the day. In the North American session, GBP/USD is trading at 1.2490. On the release front, US Final GDP posted a gain of 2.1%, edging above the estimate of 2.0%. Unemployment claims jumped to 258 thousand, well above the forecast of 244 thousand. Later in the day, the UK releases consumer confidence data. On Friday, the  UK will publish Current Account and Final GDP. The key US event is UoM Consumer Sentiment.

President Trump has taken aim at currency manipulators, according to report out of the US on Thursday. During the presidential campaign, Trump attacked China for undervaluing its currency, and recently claimed that Japan was artificially lowering the yen in order to gain an unfair trading advantage. Although the report provided no specifics, threats from the US to sanction currency manipulators could have significant impact on the currency markets.

It’s been a rough start for the Trump administration, which has been beset by controversy and crises. Trump, who has been in office for more than two months, has yet to provide any details of an economic policy, to the consternation of the markets. Last week, Trump’s proposed healthcare bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.

With the shock of the stunning Brexit vote still resonating, the UK gave formal notice its intent to leave the EU on Wednesday. The negotiations over the breakup, are supposed to be conducted over a two-year period, and promise to be tough and perhaps acrimonious. The EU has no intentions of giving Britain a better deal than it had within the club, and wants the first item of business to be “exit bill”  for Britain’s share of debts, pensions and other payments. The EU says the amount in demand could be as high as EUR 60 billion, but the UK government is likely to balk at the bill. For its part, the British government needs to reach what it considers a fair deal, and has threatened to leave the EU without a deal if the EU is intransigent in the negotiations. That scenario,  labeled “hard Brexit”, would likely take a toll on the British economy and could send the pound downward. We’re likely to have some down time before negotiations even begin, as some European policymakers have suggested June as a starting date.

GBP/USD Fundamentals

Thursday (March 30)

Upcoming Key Events

Friday (March 31)

*All release times are GMT

*Key events are in bold

GBP/USD for Thursday, March 30, 2017

GBP/USD March 30 at 12:30 EST

Open: 1.2440 High: 1.2525 Low: 1.2402 Close: 1.2490

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2272 1.2351 1.2471 1.2571 1.2706 1.2865

Further levels in both directions:

OANDA’s Open Positions Ratio

GBP/USD ratio continues to show limited movement this week. Currently, long positions have a slender majority (52%). This is indicative of slight trader bias towards the pair continuing to move higher.

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 [4]

Market Analyst at OANDA [5]
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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