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GBP/USD – British pound slide continues on Brexit nerves

GBP/USD has posted sharp losses in the Monday session. In North American trade, the pair is trading at 1.2865, down 0.85% since the Friday close. It’s a quiet start to the week, with no British events and one minor U.S. indicator. On Tuesday, the focus will be on British employment numbers, highlighted by employment change and wage growth.

The pound lost ground on Friday, courtesy of strong inflation numbers out of the United States. The Producer Price Index (PPI) jumped 0.6% in October, its sharpest gain since January 2017. This easily beat the estimate of 0.2%. Core PPI was also sharp, with a gain of 0.5%, compared to a gain of 0.2%. Stronger inflation will reinforce expectations that the Fed will hike rates hike in December. Currently, the odds of a quarter-percent rate hike stands at 76%. On the consumer front, UoM consumer sentiment dropped to 98.3, down from 99.0 points. Still, this beat the forecast of 98.0 points.

The pound roared higher at the start of November, but has since given up much of those gains. The currency declined late last week, and the downward trend has continued on Monday. Investors are increasingly worried about a ‘hard Brexit’, as months of intense negotiations between British and European officials continue. Negotiators met on the weekend but failed to bridge the gap over the Irish border. The EU wants the UK to be temporarily tied in a customs union with the EU until an agreement over the border can be reached, but pro-Brexit MPs are dead set against being forced to remain in a customs union with Europe. On Monday, Prime Minister May canceled a cabinet meeting over Brexit, a sign that serious obstacles remain before an agreement can be signed. May wants the EU to hold a special Brexit summit this month, but this is looking unlikely unless there is a breakthrough in the talks.

GBP weakens as Brexit advances stall [1]

May forced to cancel Monday cabinet meeting [2]

GBP/USD Fundamentals

Monday (November 12)

Tuesday (November 13)

*All release times are DST

*Key events are in bold

GBP/USD for Monday, November 12, 2018

GBP/USD November 12 at 11:20 EST

Open: 1.2917 High: 1.2946 Low: 1.2872 Close: 1.2865

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2616 1.2706 1.2812 1.2915 1.3048 1.3173

GBP/USD showed little movement in the Asian session. The pair edged higher in European trade and is steady 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 [6]

Market Analyst at OANDA [7]
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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