GBP/USD – British Pound Remains Subdued

The British pound continues to have a quiet week and is showing little movement in the Wednesday session. In North American trade, GBP/USD is trading at 1.3394, up 0.15% since the Friday close. On the release front, there are no British events on the schedule.

In the U.S, the first key indicators of the week were mixed. CB Consumer Confidence slowed to 122.2, well off the estimate of 128.2 points. Pending Home Sales posted a small gain of 0.2%, beating the estimate of -0.4%. Housing numbers continue to beat expectations. Last week, Housing Starts came in at 1.30 million, beating the forecast of 1.25 million. On Tuesday, New Home Sales sparkled, with a gain of 733 thousand. This easily beat the estimate of 654 thousand, and was the highest reading since September 2007. On Thursday, the US releases unemployment claims, which is expected to drop to 241 thousand.

The Brexit negotiations are finally shifting to trade, much to the relief of an embattled Prime Minister May, who has faced harsh criticism over her handling of the talks with the Europeans. Still, May has her work cut out for her, with little more than a year until Britain leaves the European Union. Her cabinet remains split on what a Brexit deal will look like, and the Europeans are in no mood to do Britain any favors, in order not to give other EU members any ideas about jumping ship. 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. There was a taste of this last week regarding financial services. The EU senior negotiator, Michel Barnier, said Britain’s financial services would not be included in a Brexit deal, as no free trade agreements have included financial services. BoE Governor Mark Carney took issue with Barnier,  arguing that 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 both Britain and the EU will have to show some flexibility in order to hammer out an agreement. Given the lack of trust between the sides, the talks will likely hit plenty of snags, and this could weigh on the British pound in the coming months.

GBP/USD Fundamentals

Wednesday (December 27)

  • 10:00 US CB Consumer Confidence. Estimate 128.2. Actual 122.1
  • 10:00 US Pending Home Sales. Estimate -0.4%. Actual +0.2%

Thursday (December 28)

  • 8:30 US Unemployment Claims. Estimate 241K

*All release times are GMT

*Key events are in bold

 

GBP/USD for Wednesday, December 27, 2017

GBP/USD December 27 at 11:45 EDT

Open: 1.3374 High: 1.3430 Low: 1.3367 Close: 1.3394

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3035 1.3186 1.3221 1.3402 1.3503 1.3655

GBP/USD was flat in the Asian session. The pair posted gains in the European session but has given up most of these gains in North American trade

  • 1.3321 is providing support
  • 1.3402 was tested earlier in resistance. It is a weak line

Current range: 1.3221 to 1.3402

Further levels in both directions:

  • Below: 1.3221, 1.3186 and 1.3035
  • Above: 1.3402, 1.3503, 1.3655 and 1.3809

OANDA’s Open Positions Ratio

In the Wednesday session, GBP/USD ratio is showing short and long positions almost evenly split. This is indicative of a lack of trader bias as to what direction GBP/USD will take next.

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

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.