GBP/USD – Pound Slightly Higher, Investors Look for Economic Cues

The British pound has posted slight gains on Wednesday, continuing the upward trend which marked the Tuesday session. In North American trade, GBP/USD is trading at 1.3409, up 0.11% on the day. On the release front, there are no major events out of the U.S or Britain. On Thursday, the U.K releases Halifax HPI and the U.S publishes unemployment claims.

PMI reports, which provides a barometer of the health of the British economy, were positive in May. Last week, Manufacturing PMI rose to 54.4, above the estimate of 53.5 points. Construction PMI remained unchanged at 52.5, beating the estimate of 52.0 points. Services PMI also pointed upwards and hit a 3-month high. The indicator improved to 54.0, which beat the forecast of 52.9 points. All three indicators continue to point to expansion at a crucial time, as the U.K continues to grapple with Brexit, which has raised considerable apprehension about how the economy will fare when the U.K departs the European Union. With the services, construction and manufacturing sectors generally in good shape, sentiment towards the British pound should remain positive.

Canada is the host of the G-7 meetings this year, and finance ministers from six countries were united in their criticism of US Treasury Secretary Steve Mnuchin over a brewing trade war. Last week, the Trump administration imposed stiff tariffs on Canada, Mexico and the European Union. Prime Minister May expressed her disappointment with the U.S move in a conversation with President Trump. Canada will host the G-7 leaders on June 8, with the U.S tariffs sure to be high on the agenda. If the trade battle escalates, the result will be a lose-lose and thousands of British jobs could be at stake.

After weeks of speculation, the much-anticipated summit between the US President Trump and North Korean President Kim Jong-un is back on. The two leaders will meet on June 12 in Singapore, marking the first ever face-to-face meeting between leaders of the U.S and North Korea. Trump has tried to lower expectations, saying the sides are unlikely to reach an agreement on North Korea relinquishing its nuclear weapons. Still, the fact that the two leaders are meeting is a sign that significant progress is being made in the long-standing dispute between the two Koreas.

  USD can’t find a grip

GBP/USD Fundamentals

Wednesday (June 6)

  • 6:40 British MPC Member Silvana Tenreyro Speaks
  • 8:30 US Revised Nonfarm Productivity. Estimate 0.7%. Actual 0.4%
  • 8:30 US Revised Unit Labor Costs. Estimate 2.7%. Actual 2.9%
  • 8:30 US Trade Balance. Estimate -50.0B. Actual -46.2B
  • 10:30 US Crude Oil Inventories. Estimate -2.0M. Actual 2.1M
  • 12:00 British MPC Member Ian McCafferty Speaks

Thursday (June 7)

  • 3:30 British Halifax HPI. Estimate 1.1%
  • 8:30 US Unemployment Claims. Estimate 223K

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, June 6, 2018

GBP/USD June 6 at 12:15 DST

Open: 1.3395 High: 1.3443 Low: 1.3388 Close: 1.3409

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3186 1.3301 1.3398 1.3494 1.3613 1.3712

GBP/USD was flat in the Asian session and posted considerable gains in European trade. The pair has posted small losses in North American trade

  • 1.3398 is providing support
  • 1.3494 is the next line of resistance
  • Current range: 1.3398 to 1.3494

Further levels in both directions:

  • Below: 1.3398, 1.3301, 1.3186 and 1.3065
  • Above: 1.3494, 1.3613 and 1.3712

OANDA’s Open Positions Ratio

GBP/USD ratio is showing little movement this week. Currently, long positions have a majority (73%), 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.