The British pound has resumed its upward movement to kick off the week. In Monday’s North American session, GBP/USD is trading at 1.3939, up 0.60% on the day. In economic news, there are no British or US events on Monday. On Tuesday, the UK releases Public Sector Net Borrowing, and the US will publish the Richmond Manufacturing Index.
The US government shutdown has entered its third day, and lawmakers are trying to find a solution, with a vote in Senate expected later on Monday. Without funding, many non-essential government services have been forced to shut down. Democrats and Republicans are now playing the ‘blame game’ and pointing fingers at who is responsible for the crisis. The Democrats refused to vote for the spending measure until a deal is hammered out over Daca, a program for children who are illegal immigrants that Trump has threatened to deport. On Sunday, Senate majority leader, Mitch McConnell suggested that he would allow a vote on immigration reform in February if Democrats agree to fund the government. With congressional elections looming, both parties will not want to anger voters, so we could see the crisis resolved this week.
The financial sector in the UK is expected to take a hit when Britain departs the European Union, and many foreign banks with operations in London are looking at setting up shop on the continent. The Bank of England is trying to help, and in December, the Bank said that it would exempt European bank branches in London from costly capital rules after Brexit, if the EU co-operated with the BoE. The BoE wants more clarity on Brexit, warning that foreign banks could accelerate their departure if there is no Brexit transition deal in place by the end of March. Given that the negotiations have not gone well until now, it appears overly optimistic to expect the sides to reach a transition deal in the next few weeks.
Monday (January 22)
- There are no UK or US events
Tuesday (January 23)
- 4:30 British Public Sector Net Borrowing. Estimate 4.2B
- 6:00 British CBI Industrial Order Expectations. Estimate 13
- 10:00 US Richmond Manufacturing Index. Estimate 19
*All release times are GMT
*Key events are in bold
GBP/USD for Monday, January 22, 2018
GBP/USD January 21 at 12:10 EDT
Open: 1.3855 High: 1.3970 Low: 1.3856 Close: 1.3939
GBP/USD continues to break through resistance lines. The pair inched lower in the Asian session and posted gains in the European session. The pair continues to move higher in the North American session
- 1.3901 is providing support
- 1.4010 is the next resistance line
Current range: 1.3901 to 1.4010
Further levels in both directions:
- Below: 1.3901, 1.3809, 1.3655, and 1.3503
- Above: 1.4010, 1.4128 and 1.4271
OANDA’s Open Positions Ratio
In the Monday session, GBP/USD ratio is showing short positions with a majority (59%). This is indicative of trader bias towards GBP/USD reversing directions and moving to lower ground.
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.