GBP/USD – Pound Edges Higher in Thin Holiday Trade

The British pound has posted slight gains on Monday, erasing the losses seen on Friday. In North American trade, GBP/USD is trading at 1.3571, up 0.29% on the day. British banks are closed for May Day, and there are no British releases. It’s a quiet day in the US, with no major events. On Tuesday, the US releases PPI and JOLTS Job Openings. We’ll also hear from Federal Reserve Chair Jerome Powell, who will speak at an event in Zurich.

It has been a rough run for the British pound, which posted a third consecutive losing week. The pound has slid 4.9% since mid-April, and GBP/USD dropped below the 1.35 line on Friday for the first time since early January. In addition to a broadly stronger US dollar, recent weak British numbers have soured sentiment towards the pound. Preliminary GDP for the first quarter missed the forecast with a negligible gain of 0.1%, and Manufacturing and Services PMIs also fell short of their estimates. The soft data has also drastically lowered expectations that the Bank of England will raise interest rates on Thursday. Most analysts expect the BoE to delay a hike until the second half of the year, with August or November being the most likely months for a rate hike.

In the US, job numbers were a mixed bag on Friday. Nonfarm payrolls rebounded with a gain of 164 thousand, although this fell short of the estimate of 190 thousand. Wage growth dropped from 0.3% to 0.1%, missing the estimate of 0.2 percent. There was some good news from the unemployment rate, which dropped to 3.9%, beating the estimate of 4.1%. The Fed will likely be pleased that nonfarm payrolls were not red hot, as they April report justifies its policy of gradual rate hikes.

All eyes will be on this week’s US CPI report

U.S Dollar Bulls Take Firm Control

GBP/USD Fundamentals

Monday (May 7)

• 8:25 US FOMC Member Raphael Bostic Speaks
• 14:00 US FOMC Member Thomas Barkin Speaks
• Tentative – US Loan Officer Survey
• 15:00 US Consumer Credit. Estimate 16.2B

Tuesday (May 8)

• 3:15 Federal Reserve Chair Jerome Powell Speaks
• 8:30 US PPI. Estimate 0.2%
• 8:30 US Core PPI. Estimate 0.2%
• 10:00 US JOLTS Job Openings. Estimate 6.02M

*All release times are DST

*Key events are in bold

GBP/USD for Monday, May 7, 2018

GBP/USD May 7 at 11:15 DST

Open: 1.3531 High: 1.3573 Low: 1.3515 Close: 1.3571

GBP/USD Technical

GBP/USD showed little movement in the Asian and European sessions. The pair has edged higher in North American trade

• 1.3494 is providing support
• 1.3613 is the next resistance line
• Current range: 1.3494 to 1.3613

Further levels in both directions:

• Below: 1.3494, 1.3402 and 1.3301
• Above: 1.3613, 1.3712, 1.3796 and 1.3901

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is showing long positions with a majority (61%). This is indicative of trader bias towards GBP/USD continuing to move upwards.

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.