The British pound is trading sideways in the Tuesday session. In North American trade, GBP/USD is trading at 1.3975, down 0.14% on the day. In economic news, the British public sector deficit dropped sharply to GBP 1.0 billion, beating the estimate GBP 4.2 billion. In the US, the Richmond Manufacturing Index, slowed to 14, well off the forecast of 19 points. On Wednesday, the UK release key employment numbers, led by Claimant Change. The US will publish Existing Home Sales.
Despite plenty of hand wringing over Brexit, the British economy has been performing fairly well. Key employment numbers will be released on Wednesday, and the markets are expecting solid readings for unemployment rolls and wage growth. If these predictions prove accurate, investors could give a thumbs-up and push the pound higher. The markets are keeping a close eye on Preliminary GDP for Q4, which will be released on Friday. Earlier on Tuesday, the pound hit the symbolic 1.40 level for the first time since June 2016. The currency has impressed in January, jumping 3.6% against the dollar.
The US government shutdown turned out to be little more than a nuisance, with only one working day lost. On Monday, the Senate voted 266-150 to extend government funding until February 8. This stopgap measure will enable the government to provide services during that time, but the lawmakers will need to hammer out a longer-term agreement, as these short extensions are just band aid solutions. The Democrats held up a funding bill last week, in order to force the Republicans to the table over illegal immigration. The Republicans have promised to hold a vote on this issue, but many Democratic lawmakers remain skeptical that President Trump and the Republicans will deal in good faith over immigration.
Tuesday (January 23)
- 4:30 British Public Sector Net Borrowing. Estimate 4.2B. Actual 1.0B
- 6:00 British CBI Industrial Order Expectations. Estimate 13. Actual 14
- 10:00 US Richmond Manufacturing Index. Estimate 19. Actual 14
Wednesday (January 24)
- 4:30 British Average Earnings Index. Estimate 2.5%
- 4:30 British Claimant Count Change. Estimate 2.3K
- 4:30 British Unemployment Rate. Estimate 4.3%
- 10:00 US Existing Home Sales. Estimate 5.72M
*All release times are GMT
*Key events are in bold
GBP/USD for Tuesday, January 23, 2018
GBP/USD January 23 at 11:55 EDT
Open: 1.3987 High: 1.4028 Low: 1.3916 Close: 1.3967
GBP/USD was flat in the Asian session. The pair edged lower in the European session but has recovered in North American trade
- 1.3901 is providing support
- 1.4010 was tested earlier in resistance. It remains a weak 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
GBP/USD ratio is almost unchanged in the Tuesday session. Currently, short positions have a majority (59%), indicative of trader bias towards GBP/USD continuing to move 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.