GBP/USD – Pound Breaks 1.40 as Britain Gets Brexit Transition Deal

The British pound has posted gains in the Monday session. In North American trade, GBP/USD is trading at 1.4040, up 0.69% on the day. On the release front, British Rightmove HPI posted a gain of 1.5%, its strongest reading since February 2017. There are on US events on the schedule. On Tuesday, the UK releases a host of inflation indicators, led by CPI.

After months of wrangling between London and Brussels, the two sides announced that there would be a transition period following the UK’s departure from the EU in March 2019. The transition deal will kick in at that time, lasting until December 2020. The deal covers the rights and status of EU citizens in the UK and British citizens in the EU, and allows the UK to pursue new trade agreements during that time. There are still issues to iron out, such as the Northern Ireland border. The transition period is a major, positive development, in that it will enable Britain to enjoy the benefits of the common market, albeit without a seat at the table.

Pound Soars as EU announces Brexit Transition Deal

The Federal Reserve is poised to raise interest rates on Wednesday, which would mark the first hike of 2018. According to the CME Group, the odds of a quarter-point raise stand at an impressive 91 percent. What can we expect from the Fed during the year? The pressing question is how many rate hikes will we see in 2018. The current Fed projection remains at three hikes, but a robust US economy 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 upcoming inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.

GBP/USD Fundamentals

Sunday (March 18)

  • 20:01 British Rightmove HPI. Estimate 1.5%

Monday (March 19)

  • 9:40 US FOMC Member Raphael Bostic Speaks

Tuesday (March 20)

  • 5:30 British CPI. Estimate 2.8%

*All release times are GMT

*Key events are in bold

GBP/USD for Monday, March 19, 2018

GBP/USD March 19 at 12:10 EDT

Open: 1.3944 High: 1.4089 Low: 1.3913 Close: 1.4040

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3809 1.3901 1.4010 1.4128 1.4227 1.4345

GBP/USD ticked lower in the Asian session. After posting strong gains in the European trade, the pair has edged lower in the North American session

  • 1.4010 is providing weak support
  • 1.4128 is a weak resistance line
  • Current range: 1.4010 to 1.4128

Further levels in both directions:

  • Below: 1.4010, 1.3901, 1.3809 and 1.3744
  • Above: 1.4128, 1.4227 and 1.4345

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is showing short and long positions as 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.