The British pound is down slightly in the Monday session, after posting strong gains on Friday. In the North American session, the pair is trading at 1.3112, down 0.17% on the day. On the release front, it’s a quiet start to the week, with no British events. In the U.S, Existing Sales dropped to 5.38 million, missing the estimate of 5.46 million. On Tuesday, CBI Industrial Order Expectations is expected to drop to 8 points.
Is the British economy in trouble? Key British indicators hit some turbulence last week, although the pound escaped mostly unscathed, with modest losses. Employment data was weaker than expected on Tuesday, and this was followed by a soft CPI release a day later. On Thursday, retail sales declined 0.5%, surprising the markets which had expected a gain of 0.1%. This marked the first decline since March. The weak numbers have dampened expectations that the BoE will raise interest rates at its August meeting. With the May government continuing to squabble over Brexit and negotiations with the EU at a standstill, the pound could face further headwinds and drop under the symbolic 1.30 level.
The U.S. dollar was broadly lower on Friday after U.S President Trump made comments critical of Federal Reserve monetary policy. U.S presidents traditionally do not comment on moves by the Fed, but that did not prevent Trump from tweeting on Thursday that “tightening now hurts all that we have done”. On the weekend, Treasury Secretary Steven Mnuchin engaged in damage control, saying at the G-20 meeting that Trump was not interfering with the Fed policy of gradually raising rates. However, investors weren’t buying Mnuchin’s apologetics, and the U.S dollar continued to lose ground in Monday’s Asian session. There was more for investors to fret over, as Trump also attacked the EU and China for manipulating their currencies and keeping interest rates lower. This has raised concerns that the current global trade war could be followed by a currency war.
Monday (July 23)
- 10:00 US Existing Home Sales. Estimate 5.46M. Actual 5.38M
Tuesday (July 24)
- 4:30 British CBI Industrial Order Expectations. Estimate 8
*All release times are DST
*Key events are in bold
GBP/USD for Monday, July 23, 2018
GBP/USD July 23 at 11:50 DST
Open: 1.3135 High: 1.3159 Low: 1.3098 Close: 1.3112
GBP/USD showed limited movement in the Asian and European sessions. The pair has edged higher in North American trade
- 1.3088 is providing support. It is a weak line
- 1.3186 is the next resistance line
- Current range: 1.3088 to 1.3186
Further levels in both directions:
- Below: 1.3088, 1.2996, 1.2852 and 1.2706
- Above: 1.3186, 1.3263 and 1.3362
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