The British pound has recorded considerable losses in the Thursday session. In North American trade, GBP/USD is trading at 1.3815, down 0.62% on the day. In economic news, there are no British events on the schedule. In the US, unemployment claims jumped to 231 thousand, well above the estimate of 220 thousand. On Friday, the US releases wage growth and nonfarm payrolls, and the UK publishes Manufacturing Production and the trade deficit.
Tensions between London and Brussels are palpable, as the two sides seem far apart on their post-Brexit relationship. On Wednesday, Donald Tusk, president of the European Council, advised Prime Minister May to “pink’ her red lines on Brexit, if Britain wants to maintain a close economic relationship with the bloc. May has insisted that there will be no customs union, and the European Court of Justice will have no jurisdiction over the UK. Last week, the EU published draft negotiating guidelines for Brexit, and the guidelines warned of “negative economic consequences” if Britain does not soften its position. Tusk added that he does not want to build a wall with Britain, and the EU could offer Britain a free trade agreement, with zero tariffs. At the same time, Tusk warned that Brexit will make trade between the two sides “complicated and costly” and the EU would not allow Britain to cherry pick in any future trade arrangement. EU members are expected to sign off on the negotiating guidelines at a summit in late March, which could trigger a nasty response from the May government.
The US dollar has been under pressure since US President Trump proposed stiff tariffs on steel imports, much to the consternation of the European Union and other US trading partners. There is also strong domestic opposition to the proposal, as Republican lawmakers, including House Speaker Paul Ryan, have come out against the move. This has raised hopes that Trump will back down. There was further drama on Wednesday, as Gary Cohn, Trump’s chief economic adviser, resigned. Cohn was a strong advocate of free trade, so his resignation could weaken opposition in the White House to the tariffs. Will Trump make good on his threat or back off? Until the situation is resolved, traders should be prepared for continuing volatility in the markets.
Thursday (March 8)
- 7:30 US Challenger Job Cuts. Actual -4.3%
- 8:30 US Unemployment Claims. Estimate 220K. Actual 231K
- 10:30 US Natural Gas Storage. Estimate -58B. Actual -57B
Friday (March 9)
- 4:30 British Manufacturing Production. Estimate 0.2%
- 4:30 British Goods Trade Balance. Estimate -12.0B
- 8:30 US Average Hourly Earnings. Estimate 0.2%
- 8:30 US Nonfarm Employment Change. Estimate 201K
- 8:30 US Unemployment Rate. Estimate 4.0%
*All release times are GMT
*Key events are in bold
GBP/USD for Thursday, March 8, 2018
GBP/USD March 8 at 12:10 EDT
Open: 1.3902 High: 1.3910 Low: 1.3818 Close: 1.3825
GBP/USD was flat in the Asian session. The pair ticked lower in European trade and has posted considerable losses in North American trade.
- 1.3809 is a weak support level
- 1.3901 is the next resistance line
Current range: 1.3809 to 1.3901
Further levels in both directions:
- Below: 1.3809, 1.3744, 1.3613 and 1.3480
- Above: 1.3901, 1.4010 and 1.4128
OANDA’s Open Positions Ratio
GBP/USD ratio is showing little movement in the Thursday session. Currently, long positions have a slender majority, indicative of slight 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.