GBP/USD – British pound ticks lower, markets eye Federal Reserve, US GDP

GBP/USD has posted small losses on Wednesday, after recording gains in the past two sessions. Currently, the pair is trading at 1.3169, down 0.10% on the day. In the U.K, a CBI survey showed that retail sales volume dropped to 23, but still beat the estimate of 18 points. In the U.S, the spotlight is on the Federal Reserve, which is virtually certain to raise the benchmark rate to a range between 2.00% and 2.25%. On Thursday, the U.S will publish Final GDP and durable goods orders. The U.K. releases GfK consumer confidence.

All eyes are on the Federal Reserve, which is widely expected to raise rates by 25 basis points at the conclusion of its policy meeting on Wednesday. What will be the tone of the rate statement? The U.S economy is in excellent shape, with GDP for Q2 expected at 4.2%, and unemployment hovering below 4 percent. However, the escalating global trade war has raised concerns that it could cool down global economic growth and hurt the U.S economy as well. Still, another rate hike in December is pegged at 78% according to the CME, and some experts are predicting up to four rate hikes in 2019.

With EU leaders rebuffing the latest proposals from British Prime Minister May on Brexit, negotiations over the UK leaving the EU remain deadlocked. Both sides are making preparations in the event that no deal is reached by the March deadline. European leaders reacted with alarm on Wednesday to a leaked document that Labor leader Jeremy Corbyn had instructed Labor MPs to vote against any deal May brings home, in order to trigger new elections. Corbyn has declared that Labor will vote against any deal that does not provide the same benefits as membership in the single market, and Labor could join up with rebel Conservative MKs to torpedo a deal. Growing uncertainty as to whether a deal can be reached by March has alarmed the business sector and could weigh on the British pound.

Decision Day : The FOMC looms

US Dollar steadies ahead of FOMC decision

Look to Fed’s Powell for help

GBP/USD Fundamentals

Wednesday (September 26)

  • 4:30 British High Street Lending. Estimate 39.7K. Actual 39.4K
  • 6:00 British CBI Realized Sales. Estimate 18. Actual 23
  • 10:00 US New Home Sales. Estimate 630K
  • 10:30 US Crude Oil Inventories
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.25%
  • 14:30 FOMC Press Conference

Thursday (September 27)

  • 8:30 US Core Durable Goods Orders. Estimate 0.4%
  • 8:30 US Final GDP. Estimate 4.2%
  • 8:30 US Durable Goods Orders. Estimate 1.9%
  • 16:30 US Fed Chair Powell Speaks
  • 19:01 British GfK Consumer Confidence. Estimate -8

*All release times are DST

*Key events are in bold

 

GBP/USD for Wednesday, September 26, 2018

GBP/USD September 26 at 8:40 DST

Open: 1.3183 High: 1.3188 Low: 1.3138 Close: 1.3166

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2852 1.2966 1.3088 1.3173 1.3301 1.3458

GBP/USD was flat for most of the Asian session. The pair has been choppy in European trade and recorded slight losses

  • 1.3088 is providing support
  • 1.3173 has switched to resistance following losses by GBP/USD on Wednesday. It is a weak line
  • Current range: 1.3088 to 1.3173

Further levels in both directions:

  • Below: 1.3088, 1.2966 and 1.2852
  • Above: 1.3173, 1.3301, 1.3458 and 1.3550

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.