The British is showing little movement in the Tuesday session. In North American trade, GBP/USD is trading at 1.3153, down 0.14% on the day. On the release front, there are no major British events on the schedule. In the US, JOLT Job Openings edged up to 6.09 million, easily beating the estimate of 5.98 million. Later in the day, Fed Chair Janet Yellen will speak at an event in Washington.
The pound has made up some ground, after suffering sharp losses following the BoE rate hike late last week. The currency plunged 1.4 percent after the BoE raised rates for the first time since 2007. The quarter-point rate hike, from 0.25% to 0.50%, had been expected for weeks. The markets treated the move as a dovish rate, as the Bank indicated that this could be a “one and done” rate hike, given that the UK economy has lost a step, and the uncertainty of Brexit continues to concern investors. Investors were clearly not impressed, and remain concerned about the health of the British economy. Thursday’s rate hike reversed the rate cut back in August 2016, which was an “emergency cut” which the cautious BoE implemented to cushion the economy following the stunning Brexit vote in June 2016.
The Federal Reserve remains in the news, after FOMC member William Dudley announced that he will retire in mid-2018. This move could have implications for monetary policy, depending on who will replace Dudley. A possible candidate is Kevin Warsh, who made the short list for the successor to Fed Chair Janet Yellen. Warsh is in favor of higher rates and favors less regulation of the banking sector.
President Donald Trump suffered a humiliating defeat with his failed health care proposal, and the President has now set his sights on tax reform. If Trump is successful, it would mark the first major tax reform since President Reagan was president. Trump wants new legislation in place before the end of the year, but that will be a tall order, as most Democrats have come out against the proposal and not all Republicans are on board. The bill would cut corporate taxes from 35% to 20%, but predictably, Democrat and Republican lawmakers are at odds as to whether the bill will lower taxes for the middle class. Expectations that Trump will cut taxes has been the catalyst for a stock market rally over the past year, and if the bill does become law, the US dollar will likely gain ground.
Tuesday (November 7)
- 3:30 Halifax HPI. Estimate 0.2%. Actual 0.3%
- 10:00 US IBD/TIPP Economic Optimism. Estimate 51.2. Actual 53.6
- 10:00 US JOLTS Job Openings. Estimate 5.98M. Actual 6.09M
- 12:35 US FOMC Member Randal Quarles Speaks
- 14:30 US Federal Reserve Chair Janet Yellen Speaks
- 15:00 US Consumer Credit. Estimate 18.4B
*All release times are GMT
*Key events are in bold
GBP/USD for Tuesday, November 7, 2017
GBP/USD November 7 at 12:20 EDT
Open: 1.3172 High: 1.3178 Low: 1.3110 Close: 1.3153
GBP/USD was flat in the Asian session. The pair edged lower in the European session but has recovered in North American trade
- 1.3122 was tested earlier in support
- 1.3224 is the next resistance line
Further levels in both directions:
- Below: 1.3122, 1.3022, 1.2904 and 1.2811
- Above: 1.3224, 1.3347 and 1.3445
- Current range: 1.3122 to 1.3224
OANDA’s Open Positions Ratio
GBP/USD ratio is showing movement towards short positions. Currently, long positions have a strong majority (55%). This is indicative of trader bias towards GBP/USD reversing directions and moving higher.