The British pound has posted losses in the Tuesday session. In North American trade, GBP/USD is trading at 1.3592, down 0.47% on the day. There are no major events on the schedule. In the UK, Halifax HPI plunged 3.1%, its sharpest decline since 2010. Later in the day, the UK releases BRC Retail Sales Monitor, with the markets braced for a decline of 0.7%. Over in the US, JOLTS Jobs Openings jumped to 6.55 million, crushing the estimate of 6.02 million. All eyes are on US President Trump, who will announce if he is pulling the United States out of the Iran nuclear agreement. On Wednesday, the US releases PPI reports.
The pound continues to stumble. GBP/USD dropped to a low of 1.3484 earlier on Tuesday, its lowest level since late December. British GDP and other key indicators have pointed to weaker economic activity, and this may dissuade Bank of England policymakers from raising interest rates until the second half of 2018. Just a few weeks ago, analysts expected the bank to raise rates by a quarter-point, but the cautious BoE is now expected to delay a rate hike until August, at the earliest.
Prime Minister May hasn’t had an easy time with Brexit. May continues to face strong opposition to her Brexit strategy from the opposition and even within the government. To make matters even worse, the House of Lords has inflicted a number of political defeats on the government. On Tuesday, the House of Lords will vote on an amendment to the EU Withdrawal Bill which would instruct the government to enter negotiations over UK membership in the European Economic Area (EEA). This scheme would allow the UK full access to the European common market, but the UK would not be part of common agricultural policy. Proponents of the proposal say this would allow for a ‘soft’ Brexit, but opponents argue that Britain needs to make a clean break in order to gain full control over its economy.
Tuesday (May 8)
- 3:15 Federal Reserve Chair Jerome Powell Speaks
- 3:30 Halifax HPI. Estimate -0.3%. Actual -3.1%
- 6:00 US NFIB Small Business Index. Estimate 105.2. Actual 104.8
- 10:00 US JOLTS Job Openings. Estimate 6.02M. Actual 6.55M
- 10:02 US IBD/TIPP Economic Optimism. Estimate 51.3. Actual 53.6
- 14:00 US President Trump Speaks
- 19:01 British BRC Retail Sales Monitor. Estimate -0.7%
Wednesday (May 9)
- 8:30 US PPI. Estimate 0.2%
- 8:30 US Core PPI. Estimate 0.2%
*All release times are DST
*Key events are in bold
GBP/USD for Tuesday, May 8, 2018
GBP/USD May 8 at 11:00 DST
Open: 1.3556 High: 1.3593 Low: 1.3484 Close: 1.3516
GBP/USD showed little movement in the Asian and European sessions. The pair has edged higher in North American trade
- 1.3494 is providing weak 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
GBP/USD ratio is showing slight movement towards long positions. Currently, long positions have a majority (64%), indicative of trader bias towards GBP/USD reversing directions and moving upwards.