The British pound has started the week with gains, after strong losses on Friday. In Monday’s North American trade, GBP/USD is trading at 1.3395, up 0.52% on the day. On the release front, British CBI Industrial Order Expectations remained unchanged at 17, beating the estimate of 14 points. There were no major events in the US. On Tuesday, the key event on the schedule is US Building Permits.
President Donald Trump appears on his way to claiming his first major legislative victory in office. Thanks to feverish efforts by Republican lawmakers, tax reform is quickly moving through Congress, with a final vote expected this week. The House and Senate have hammered out their differences, and the uniform bill, which must be approved in both houses, is expected to muster the necessary votes, even with all Democrats expected to vote against the bill. Crucially, two Republican senators who were opposed to the bill have now lent their support to the bill. The legislation is the first major overhaul of the US tax code in 30 years, and is expected to strengthen the US economy.
As expected, the Bank of England stayed pat and kept the benchmark interest rate at 0.50% late last week. The vote by MPC members was significant in that there were no dissenters, as all 9 policymakers were in agreement for the first time since February. BoE Governor Mark Carney will certainly be pleased with the unanimous vote, but could be on the hot seat as inflation continues to creep higher. CPI climbed to 3.1% in November, edging above the forecast of 3.0%. Inflation is now running at its highest level since March 2012, and Carney will have to write an open letter to open letter to the British finance minister, explaining how the BoE plans to lower inflation closer to the Bank’s target of 2.0%. Carney would rather not raise rates in the next few months, but that could be the most effective tool in bringing down inflation, which is at uncomfortably high levels.
Monday (December 18)
- 6:00 British CBI Industrial Order Expectations. Estimate 14. Actual 17
- 10:00 US NAHB Housing Market Index. Estimate 70. Actual 74
Tuesday (December 19)
- 8:30 US Building Permits. Estimate 1.28M
- 8:30 US Current Account. Estimate -117B
- 8:30 US Housing Starts. Estimate 1.25M
- Tentative – US FOMC Member Neel Kashkari Speaks
*All release times are GMT
*Key events are in bold
GBP/USD for Monday, December 18, 2017
GBP/USD December 18 at 11:55 EDT
Open: 1.3324 High: 1.3418 Low: 1.3310 Close: 1.3395
GBP/USD showed little movement in the Asian session. The pair has inched lower in the European and North American sessions
- 1.3321 is providing support
- 1.3402 is a weak resistance line
Further levels in both directions:
- Below: 1.3321, 1.3186 and 1.3035
- Above: 1.3402, 1.3503, 1.3655 and 1.3809
- Current range: 1.3321 to 1.3402
OANDA’s Open Positions Ratio
In the Monday session, GBP/USD ratio is showing short positions with a majority (56%). This is indicative of trader bias towards GBP/USD reversing directions and moving 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.