The British pound is showing limited movement in the Wednesday session. In North American trade, GBP/USD is trading at 1.3407, up 0.15% on the day. Earlier on Wednesday, BoE Governor Mark Carney testified before the Treasury Select Committee in London. On the release front, CBI Realized Sales slowed to 20, shy of the estimate of 21 points. In the US, Existing Home Sales surged 5.81 million in November, its strongest pace since December 2006. Thursday is a busy day in the US, with the release of third quarter Final GDP. We’ll also get a look at the Philly Fed Manufacturing Index and unemployment claims.
Brexit talks are expected to focus on trade relations, as sufficient progress has been made on other issues, such as the size of Britain’s divorce bill and the Northern Ireland border. What will a trade relationship between Britain and the European Union look like? That remains unclear, but it’s no secret that the two sides have very different views of a future trade agreement. BoE Governor Mark Carney waded into the thorny issue on Thursday, in testimony before a parliamentary committee. Carney took issue with comments by Michel Barnier, the EU’s senior negotiator. Barnier said Britain’s financial services would not be included in a Brexit deal, as no free trade agreements have included financial services. Carney disputed Barnier’s reasoning, saying that British financial system is “effectively the banker for Europe” and there was no reason why the UK and the EU couldn’t maintain some type of free trade in financial services. Clearly, the sides remain far apart on the “end phase” of what a Brexit agreement will look like, and negotiations promise to be protracted and difficult.
It’s been a tough battle for Republicans, but President Trump’s election pledge to implement major tax reform is on the verge of becoming law. The tax bill was passed in the House of Representatives and the Senate on Tuesday, but the bill is being sent back to the House for another vote on Wednesday due to a procedural requirement. The legislation is expected to be ratified by the House and will then be sent to Trump to be signed into law. As expected, the congressional votes went along party lines, with the Senate narrowly approving the bill by a count of 51-48. This marks the first major overhaul of the US tax code in 30 years, and reduces corporate taxes from 35% to 21%. After failing to overturn Obamacare, the Republicans can finally chalk up their first legislative victory in the Trump administration, ahead of Congressional elections in 2018.
Wednesday (December 20)
- 6:00 British CBI Realized Sales. Estimate 21. Actual 20
- 8:15 BoE Governor Mark Carney Speaks
- 10:00 US Existing Home Sales. Estimate 5.53M. Actual 5.81M
- 10:30 US Crude Oil Inventories. Estimate -3.6M. Actual -6.5M
- 15:00 President Trump Speaks
- 19:01 British GfK Consumer Confidence. Estimate -12
Thursday (December 21)
- 4:30 British Public Sector Net Borrowing. Estimate 8.3B
- 8:30 US Final GDP. Estimate 3.3%
- 8:30 US Philly Fed Manufacturing Index. Estimate 21.5
- 8:30 US Unemployment Claims. Estimate 232K
*All release times are GMT
*Key events are in bold
GBP/USD for Wednesday, December 20, 2017
GBP/USD December 20 at 11:05 EDT
Open: 1.3386 High: 1.3419 Low: 1.3378 Close: 1.3407
GBP/USD was flat in the Asian session. The pair edged lower in the European session and has partially recovered in North American trade
- 1.3321 remains fluid. Currently, it is a weak support line
- 1.3503 is the next line of resistance
Further levels in both directions:
- Below: 1.3402, 1.3321, 1.3186 and 1.3035
- Above: 1.3503, 1.3655 and 1.3809
- Current range: 1.3402 to 1.3503
OANDA’s Open Positions Ratio
GBP/USD ratio is unchanged in the Wednesday session. Currently, short positions have a majority (52%), indicative of slight trader bias towards GBP/USD continuing to move higher.