The British pound is showing little movement in the Tuesday session. In North American trade, GBP/USD is trading at 1.3427, unchanged on the day. On the release front, Britain posted a deficit of GBP 6.2 billion, below the estimate of 7.2 billion. This marked the first deficit after a string of three straight surpluses. British CBI Industrial Order Expectations disappointed with a reading of -3, missing the estimate of 2 points. This was the first decline since October. In the US, the Richmond Manufacturing Index jumped to 16, well above the estimate of 9 points. On Wednesday, the UK releases a host of inflation indicators, led by CPI. The Federal Reserve will release the minutes of its May policy meeting.
Bank of England Governor Mark Carney testified earlier on Tuesday before a parliamentary committee, but his remarks have had little impact on the British pound. Carney acknowledged that growth in the first quarter was weak, blaming “temporary and idiosyncratic factors”, such as massive snowstorms which hampered economic growth. The BoE has forecast growth in Q1 of just 0.4%. As for monetary policy, Carney was subtle, saying that “interest rates are more likely to go up than not, but at a gentle rate”. The bank balked at a rate hike earlier in May, due to weakening inflation and a spate of soft economic data. BoE policymakers are unlikely to raise rates before August at the earliest.
After weeks of an escalating trade war between the US and China, there was a breakthrough of sorts on Sunday. The US dollar has posted gains after Treasury Secretary Steven Mnuchin announced that the two sides had made significant progress and the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants have imposed stiff tariffs on one another in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite in tariffs means that the US can sit down with the Chinese and discuss the US trade deficit with China, which President Trump has long complained is a result of a non-level playing field with China. In addition to the trade deficit, the US wants to discuss technology transfers and cyber theft.
Tuesday (May 22)
- 4:15 British MPC Member Gertjan Vlieghe Speaks
- 4:30 British Public Sector Net Borrowing. Estimate 7.2B. Actual 6.2B
- 5:00 British Inflation Report Hearings
- 6:00 British CBI Industrial Order Expectations. Estimate 2. Actual -3
- 9:59 US Richmond Manufacturing Index. Estimate 9. Actual 16
Wednesday (May 23)
- 4:30 British CPI. Estimate 2.5%
- 4:30 British PPI Input. Estimate 1.0%
- 4:30 British RPI. Estimate 3.4%
- 6:00 British CBI Realized Sales. Estimate 4
- 10:00 US New Home Sales. Estimate 680K
- 14:00 US FOMC Meeting Minutes
*All release times are DST
*Key events are in bold
GBP/USD for Tuesday, May 22, 2018
GBP/USD May 22 at 11:25 DST
Open: 1.3427 High: 1.3491 Low: 1.3412 Close: 1.3427
GBP/USD ticked lower in the Asian session. In European trade, the pair posted gains but then retracted. GBP/USD is showing little movement in the North American session
- 1.3402 is a weak support level
- 1.3494 is the next resistance line
- Current range: 1.3402 to 1.3494
Further levels in both directions:
- Below: 1.3402, 1.3301 and 1.3186
- Above: 1.3494, 1.3613, 1.3712 and 1.3796
OANDA’s Open Positions Ratio
GBP/USD ratio is unchanged in the Tuesday session. Currently, long positions have a majority (61%), indicative of trader bias towards GBP/USD breaking out and moving lower.
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.