- MarketPulse - https://www.marketpulse.com -

GBP/USD – Pound Subdued Ahead of BoE Rate Decision, Manufacturing Production

GBP/USD is almost unchanged in the Wednesday session. In North American trade, GBP/USD is trading at 1.2950. On the release front, there are no major events in the UK or the US. Thursday will be busy on both sides of the pond. The BoE will set its benchmark rate and release the inflation report, and the UK releases Manufacturing Production. In the US, there are two key releases – PPI and unemployment claims.

The British consumer continues to spend, as underscored by a report that showed retail sales in BRC stores jumped 5.6% in April compared to a year ago. The sharp increase underscores that consumer spending remains resilient, but there are growing concerns that this trend will change in 2017. Analysts point to two major areas of concern. First, the weak British pound means that consumer purchasing power has decreased, since imported goods have become more expensive. Second, the triggering of Article 50 and the upcoming negotiations with the EU over Brexit is causing uncertainty about the economy and jobs, and this means that consumers will be holding back on buying major items. If consumer spending, a key driver of economic growth, weakens, the pound could follow suit and lose ground.

President Donald Trump is no stranger to controversy, but the political earthquake he has now stirred could become political quicksand for the new president. Trump abruptly fired FBI director James Comey on Tuesday, stunning lawmakers on both sides of the aisle. Comey, who has been conducting an investigation into possible collusion between Trump and Russia during the presidential campaign, clearly has been a thorn in Trump’s side. The White House has claimed that it fired Comey over his handling of an email scandal involving Hillary Clinton, but the move has been roundly condemned by the Democrats, and some key Republicans have also voiced opposition as well. The firestorm could heat up further, with calls in Congress to appoint a special prosecutor into Trump’s connections with Russia. Has Trump gone one step to far? This latest controversy could cause some jitters among investors and send the greenback to lower levels.

GBP/USD Fundamentals

Wednesday (May 10)

Thursday (May 11)

*All release times are EDT

*Key events are in bold

GBP/USD for Wednesday, May 10, 2017

GBP/USD May 10 at 11:35 EDT

Open: 1.2947 High: 1.2988 Low: 1.2927 Close: 1.2939

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2571 1.2706 1.2865 1.2946 1.3058 1.3121

Further levels in both directions:

OANDA’s Open Positions Ratio

GBP/USD ratio remains unchanged this week. Currently, short positions have a majority (64%), indicative of trader bias towards GBP/USD breaking out and moving lower.

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

Latest posts by Kenny Fisher (see all [4])