GBP/USD – Strong dollar pushes British pound below 1.30

GBP/USD has posted strong losses in the Monday session. In North American trade, the pair is trading at 1.2975, down 0.72% on the day. On the release front, there are no British or U.S events. On Tuesday, the U.K releases CBI Industrial Order Expectations and the U.S publishes the Richmond Manufacturing Index.

Brexit negotiations appear deadlocked, although Prime Minister May sounded surprisingly upbeat about the status of the talks, stating in parliament that 95% of the issues have been resolved, with the status Irish border remaining in dispute. May continues to face difficulties with a restless cabinet, as some ministers are uneasy about her remarks last week that she was open to extending the transition period. May could face a leadership challenge, and a huge rally in London calling for a second referendum underscores the volatile political climate in Britain ahead of Brexit Day in just five months time. The uncertainty surrounding Brexit continues to weigh on the pound, which dropped below the symbolic 1.30 line on Monday, for the first time since October 4.

Relations between the U.S and China are frosty, with the markets nervous that the trade war could worsen. The U.S Treasury Department released its semi-annual report on foreign exchange rates, and there was some relief in the markets as the report did not name China as a currency manipulator. Still, the report said that the U.S was “deeply disappointed’ with that China refuses to disclose the extent of its foreign currency intervention. The Chinese yuan has slipped some 9 percent since April, and U.S officials are concerned that China has deliberately weakened the currency in order to counter U.S tariffs on Chinese goods, and will continue to monitor China’s currency practices.

Desperately seeking stability

China equities lead the pack as US indices lag

European update – The calm before the storm

GBP/USD Fundamentals

Monday (October 22)

  • There are no British or U.S events

Tuesday (October 23)

  • 6:00 British CBI Industrial Order Expectations. Estimate -1
  • 10:00 US Richmond Manufacturing Index. Estimate 25
  • 11:20 BoE Governor Carney Speaks
  • 13:30 US FOMC Member Bostic Speaks

*All release times are DST

*Key events are in bold

GBP/USD for Monday, October 22, 2018

GBP/USD October 22 at 11:15 DST

Open: 1.3068 High: 1.3090 Low: 1.2956 Close: 1.2974

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2723 1.2852 1.2966 1.3173 1.3301 1.3447

GBP/USD showed little movement in the Asian session. The pair posted sharp losses in European trade and has steadied in North American trade

  • 1.2966 was tested earlier in support. It is a weak line
  • 1.3173 is the next resistance line
  • Current range: 1.2966 to 1.3173

Further levels in both directions:

  • Below: 1.2966, 1.2852 and 1.2723
  • Above: 1.3173, 1.3301, 1.3447 and 1.3527

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.