GBP/USD – British Pound Steady, US Posts Mixed Numbers

It continues to be an uneventful week for the British pound. In Thursday’s North American session, GBP/USD is trading at 1.3505, up 0.12% on the day. On the release front, there are no British indicators on the schedule. In the U.S, major indicators were a mix. Unemployment claims climbed to 222 thousand, above the estimate of 216 thousand. This was the highest reading in 4 weeks. There was much better news on the manufacturing front, as Philly Fed Manufacturing Index jumped t0 34.4, crushing the estimate of 21.1 points. This was the strongest gain since February 2017.

All eyes were on British job numbers on Tuesday, and the readings were lukewarm. Wage growth dropped from 2.8% t0 2.6% in March, missing the estimate of 2.7%. Unemployment claims increased by 34.4 thousand, much higher than the estimate of 21.1 thousand. This marked a 12-month high. At the same time, the labor participation rate rose to 75.6%, the highest rate ever recorded. Policymakers at the Bank of England will have to decide what to make of the mixed readings, as the employment market and wage growth will be important factors in the bank’s thought process regarding rate future rate hikes. Weak economic numbers dissuaded the BoE from raising rates last week, but if second-quarter data is stronger, the bank could press the rate trigger at its August meeting.

In the U.S, retail sales and core retail sales posted gains in April, although both indicators fell short of the estimates. Still, consumer spending is improving after a sluggish first quarter. Investors liked what they saw, and the US dollar was broadly higher on Tuesday. At the same time, a new concern is higher gas prices, which could put a dent in consumers’ wallets and hurt spending. Oil prices have hit their highest levels in over 3 years, and with the US leaving the Iran nuclear deal and escalating tensions in the Middle East, gasoline prices could remain at high levels.

The trend is your friend.

Dollar Consolidates ahead of Today’s Event Risk

GBP/USD Fundamentals

Thursday (May 17)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.1. Actual 34.4
  • 8:30 US Unemployment Claims. Estimate 216K. Actual 221
  • 10:00 US CB Leading Index. Estimate 0.4%. Actual 0.4%
  • 10:30 US Natural Gas Storage. Estimate 105B. Actual 106B
  • 12:00 BOE Chief Economist Andy Haldane Speaks

*All release times are DST

*Key events are in bold

 

GBP/USD for Thursday, May 17, 2018

GBP/USD May 17 at 12:00 DST

Open: 1.3489 High: 1.3570 Low: 1.3474 Close: 1.3505

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3301 1.3402 1.3494 1.3613 1.3712 1.3796

GBP/USD edged higher in the Asian session and gave up these gains in European trade. The pair is steady in the North American session

  • 1.3494 has switched to a support level and remains fluid. It could see more action in the North American session
  • 1.3613 is the next resistance line
  • Current range: 1.3494 to 1.3613

Further levels in both directions:

  • Below: 1.3494, 1.3402, 1.3301 and 1.3186
  • Above: 1.3613, 1.3712 and 1.3796

OANDA’s Open Positions Ratio

GBP/USD ratio has reversed directions and is showing some movement towards long positions. Currently, long positions have a majority (64%), 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.

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.