GBP/USD – British pound higher as manufacturing output beats estimate

The British pound has edged higher in the Tuesday session, erasing the losses seen on Monday. In the North American session, the pair is trading at 1.3140, up 0.30% on the day. On the release front, British CBI Industrial Order Expectations dipped to 11 points, but still beat the estimate of 8 points. In the U.S, the Richmond Manufacturing Index remained pegged at 20 points, above the estimate of 18 points. On Wednesday, the UK releases CBI Realized Sales, while in the U.S, New Home Sales is forecast to drop sharply to 669 thousand.

With U.S trade tariffs on EU products threatening to hurt British exports and the manufacturing sector, the markets are keeping a close eye on UK manufacturing indicators. Manufacturers orders showed strong growth for a second straight month, with a reading of 11 points. The CBI Manufacturing Council welcomed the strong manufacturing data, but cautioned that “rising trade tensions and ongoing uncertainty over our future trade and customs arrangements are clearly taking their toll on manufacturers’ confidence and investment.”

Relations between the U.S and EU have nosedived in recent weeks, after months of tit-for-tat tariffs and harsh rhetoric. The U.S slapped tariffs on EU steel and aluminum back in June, and the EU has since retaliated with tariffs on a range of U.S products. President Trump has not shied away from harsh criticism about the EU, and a recent NATO summit exposed the frosty relations between Trump and EU leaders. Still, there could be better news ahead, as EU President Jean-Claude Juckner meets with President Trump on Wednesday. On Friday, Trump attacked the EU and China for manipulating their currencies and keeping interest rates lower. This has raised concerns that the current global trade tensions could be followed by a currency war. Growing concerns over the dangers of the ongoing trade war were summed up in the final communiqué from the G-20 meeting in Argentina over the weekend, which noted that “heightened trade and geopolitical tensions pose an increased risk to global growth”.

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GBP/USD Fundamentals

Tuesday (July 24)

  • 4:30 British CBI Industrial Order Expectations. Estimate 8. Actual 11
  • 9:00 US HPI. Estimate 0.4%. Actual 0.2%
  • 9:45 US Flash Manufacturing PMI. Estimate 55.1. Actual 55.5
  • 9:45 US Flash Services PMI. Estimate 56.5. Actual 56.2
  • 9:59 US Richmond Manufacturing Index. Estimate 18. Actual 20

Wednesday (July 25)

  • 6:00 British CBI Realized Sales. Estimate 16
  • 10:00 US New Home Sales. Estimate 669K

*All release times are DST

*Key events are in bold

 

GBP/USD for Tuesday, July 24, 2018

GBP/USD July 24 at 12:35 DST

Open: 1.3102 High: 1.3160 Low: 1.3072 Close: 1.3137

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2852 1.2996 1.3088 1.3186 1.3263 1.3362

GBP/USD ticked lower in the Asian session. The pair edged higher in the European session and has posted slight gains in North American trade

  • 1.3088 is providing support
  • 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

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.