GBP/USD has shown limited movement in the Tuesday session. In North American trade, the pair is trading at 1.2728, up 0.04% on the day. In economic news, British Construction PMI edged higher to 53.4, above the estimate of 52.5 points. This marked a 4-month high. As well, BoE Governor Mark Carney testified about the Brexit withdrawal agreement before a parliamentary committee. On Wednesday, the U.K. releases Services PMI.
Overshadowed by the drama surrounding Brexit, British PMIs have looked sharp in November. A strong construction PMI on Tuesday came on the heels of manufacturing PMI, which improved to 53.1, its strongest level in four months. At the same time, British manufacturers are braced for a weak gain of 0.3% in factory growth in 2019, down from a forecast of 1.1% in 2018. There are growing concerns that the post-Brexit era could mean shortages of raw materials, as businesses remain uncertain if supply routes with Europe will be disrupted by new trade barriers. Exports have slowed, and the BoE released a sober report last week, warning that the economy could contract by 8% if Britain leaves the EU without a deal in place. The British pound continues to struggle, and dropped below the 1.27 line on Monday, for the first time since mid-August.
Prime Minister May faces the toughest challenge of her political career, as she tries to convince a skeptical parliament to approve the withdrawal agreement with the European Union. Pundits are predicting that she will fall short, with opposition MPs as well as some Conservative lawmakers declaring they will vote against the agreement. May hasn’t indicated what will happen if she loses the vote, but there will clearly be pressure for her to resign, which could trigger a national election in early 2019. With parliament debating the bill this week and voting on December 11, the rhetoric on both sides promises to heat up, and traders should expect some volatility from the pound during this period.
Monday (December 3)
- 19:01 British BRC Retail Sales Monitor. Estimate -0.5%
Tuesday (December 4)
- 4:15 British BoE Governor Carney Speaks
- 4:30 British Construction PMI. Estimate 52.5. Actual 53.4
- 10:00 US FOMC Member Williams Speaks
- Tentative – IBD/TIPP Economic Optimism. Estimate 57.3. Actual 52.6
- 13:00 British MPC Member Vlieghe Speaks
Wednesday (December 5)
- 4:30 British Services PMI. Estimate 52.5
- 4:30 BoE FPC Meeting Minutes
*All release times are EST
*Key events are in bold
GBP/USD for Tuesday, December 4, 2018
GBP/USD December 4 at 11:50 EST
Open: 1.2724 High: 1.2840 Low: 1.2716 Close: 1.2726
GBP/USD inched higher in the Asian session. The pair posted strong gains in European trade but has given up these gains in North American trade
- 1.2706 is a weak support level
- 1.2812 is the next resistance line
- Current range: 1.2706 to 1.2812
Further levels in both directions:
- Below: 1.2706, 1.2589 and 1.2488
- Above: 1.2812, 1.2915, 1.3048 and 1.3173
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.