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GBP/USD – British pound gains ground on hawkish BoE stance

The British pound is almost unchanged in the Thursday session. In North American trade, GBP/USD is trading at 1.3253, up 0.62% on the day. On the release front, Britain’s budget deficit narrowed to GBP 3.4 billion, well below the estimate of GBP 5.1 billion. The Bank of England maintained the benchmark rate at 0.50%, but three policymakers voted in favor of a hike, surprising the markets. Later in the day, BoE Governor Mark Carney will deliver remarks at an event in London. Over in the U.S, key U.S indicators were mixed. The Philly Fed Manufacturing Index slid to 19.9 points, its lowest level since August. There was better news on the employment front, as unemployment claims remained unchanged at 218 thousand, beating the estimate of 220 thousand. On Friday, OPEC members meet in Vienna.

There were no surprises as the Bank of England held the course on interest rates, pegging the benchmark rate at 0.50% for a sixth straight month. However, the markets had expected the vote on rates to be 7-2, so the vote of 6-3 was unexpected and has boosted the British pound. Policymakers sounded optimistic about the economy, saying that the weak first quarter was a temporary event. The hawkish stance of the BoE has raised speculation that the Bank will press the rate trigger at the next policy meeting in August.

The escalating trade battle between the United States and China has boosted the U.S dollar but taken a toll on the British pound. The most recent round of the trade spat between China and the U.S started on Friday, when the U.S announced a 25 percent tariff on $50 billion in Chinese goods. After China responded with an identical move on U.S. imports, President Trump has now threatened to impose 10 percent tariffs on some $200 billion in Chinese goods. Not surprisingly, China has threatened to retaliate against this latest move. Trump has also slapped tariffs on steel and aluminum imports from the European Union, which directly affects British producers. If the trade war continues, the pound could be heading for further headwinds.

  (Update 1) Onwards and Upwards [1]

  Oil falls -2% as OPEC nears deal to raise production [2]

  GBP rallies on hawkish BoE [3]

GBP/USD Fundamentals

Thursday (June 21)

Friday (June 22)

*All release times are DST

*Key events are in bold

GBP/USD for Thursday, June 21, 2018

GBP/USD June 21 at 11:15 DST

Open: 1.3170 High: 1.3270 Low: 1.3102 Close: 1.3253

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2996 1.3088 1.3186 1.3263 1.3494 1.3613

GBP/USD edged lower in the Asian session. In European trade, the pair moved lower but then reversed directions and posted gains. GBP/USD has recorded slight gains in North American trade

Further levels in both directions:

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 [7]

Market Analyst at OANDA [8]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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