GBP/USD – British Pound Slightly Higher as US Posts Mixed Data

The British pound has ticked upwards in the Thursday session. In North American trade, GBP/USD is trading at 1.3977, up 0.15% on the day. On the release front, there are no key British releases on the schedule. In the US, unemployment claims dropped to 226 thousand, just below the estimate of 226 thousand. Manufacturing reports were mixed. The Philly Fed Manufacturing Index dropped to 22.3, missing the forecast of 23.1 points. There was better news from the Empire State Manufacturing Index, which jumped to 22.5, crushing the estimate of 14.9 points. On Friday, the US releases two key construction reports and Preliminary UoM Consumer Sentiment.

It’s an unusually quiet week for British releases, with no key economic indicators. The highlight of the week was the annual budget, which was released on Tuesday. Finance Minister Philip Hammond was likely relieved to deliver the budget in parliament and move on, as the economic forecasts were not particularly upbeat. According to the Office of Budget Responsibility, the country’s economic growth is expected to be weak – 1.5 percent in 2018, and just 1.3 percent in 2019 and 2020. The OECD underscored the bleak picture, when it said on Tuesday that Britain’s economy would grow more slowly than all the Group of 20 members in 2018. The economy has slowed since the Brexit vote in June 2016, taking the British pound down as well. With London and Brussels at odds over the relationship between the sides after Brexit takes effect in March 2019, the pound could face strong headwinds during the year.

The Federal Reserve is widely expected to raise interest rates next week. According to the CME Group, the odds of a quarter-point raise stand at 89 percent. What can we expect from the Fed during the year? The pressing question is how many rate hikes lie ahead in 2018. The current Fed projection remains at three hikes, but the superb nonfarm payrolls report last week has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.

 

GBP/USD Fundamentals

Thursday (March 15)

  • 6:35 British 10-year Bond Auction. Actual 1.58%
  • 8:30 US Empire State Manufacturing Index. Estimate 14.9. Actual 22.5
  • 8:30 US Philly Fed Manufacturing Index. Estimate 23.1. Actual 22.3
  • 8:30 US Unemployment Claims. Estimate 227K. Actual 226K
  • 8:30 US Import Prices. Estimate 0.3%. Actual 0.4%
  • 10:00 US NAHB Housing Market Index. Estimate 72. Actual 70
  • 10:30 US Natural Gas Storage. Estimate -99B. Actual -93B
  • 16:00 US TIC Long-Term Purchases. Estimate 35.9B

Friday (March 16)

  • 8:30 US Building Permits. Estimate 1.33M
  • 8:30 US Housing Starts. Estimate 1.30M
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 99.6
  • 10:00 US JOLTS Job Openings. Estimate 5.85M 

*All release times are GMT

*Key events are in bold

 

GBP/USD for Thursday, March 15, 2018

GBP/USD March 14 at 10:45 EDT

Open: 1.3962 High: 1.3996 Low: 1.3922 Close: 1.3984

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3744 1.3809 1.3901 1.4010 1.4128 1.4227

GBP/USD showed little movement in the Asian session. The pair posted gains in European trade but has given up these gains in the North American session

  • 1.3901 is providing support
  • 1.4010 is a weak resistance line
  • Current range: 1.3901 to 1.4010

Further levels in both directions:

  • Below: 1.3901, 1.3809, 1.3744, 1.3613
  • Above: 1.4010 and 1.4128 and 1.4227

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in the Thursday session. Currently, short and long positions are evenly split, indicative of a lack of bias towards the direction of the pair.

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.