GBP/USD has posted modest gains in the Wednesday session. In North American trade, the pair is trading at 1.2736, up 0.16% on the day. On the release front, British Services PMI fell to 50.4 points, missing the estimate of 52.5 points. There are no major releases out of the United States. On Thursday, the focus will be on U.S. employment data, with the release of ADP nonfarm payrolls and unemployment claims. The U.S. will also release ISM Non-Manufacturing PMI. OPEC members will hold a 2-meeting on Wednesday and Thursday.
Prime Minister May’s difficulties with the Brexit withdrawal agreement seem to be growing by the day. On Tuesday, parliament found the May government in contempt of parliament, which forced the release of the Attorney General’s full legal advice to the government concerning Brexit (the government had tried to get by with the release of an overview of the legal advice on Monday). The full report, which was published on Tuesday, says that if the backstop solution over the Irish border is implemented, Britain could find itself tied up with the EU indefinitely. May tried to downplay the document, but lawmakers against the withdrawal agreement are using it as further ammunition, and May’s uphill battle to pass the withdrawal agreement in parliament is only getting steeper. The p0und reacted with some sharp movement on Tuesday, but ended the day almost unchanged.
Overshadowed by the drama surrounding Brexit, British construction and manufacturing indicators pointed upwards 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.
Wednesday (December 5)
- All Day – OPEC-JMMC Meetings
- 4:30 British Services PMI. Estimate 52.5. Actual 50.4
- 4:30 BoE FPC Meeting Minutes
- 14:00 US Beige Book
- 20:15 US FOMC Member Quarles Speaks
Thursday (December 6)
- All Day – OPEC Meetings
- 8:15 US ADP Nonfarm Employment Change. Estimate 196K
- 8:30 US Unemployment Claims. Estimate 226K
- 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2
- 18:45 US Federal Reserve Chair Powell Speaks
*All release times are EST
*Key events are in bold
GBP/USD for Wednesday, December 5, 2018
GBP/USD December 5 at 11:15 EST
Open: 1.2716 High: 1.2798 Low: 1.2672 Close: 1.2736
GBP/USD was flat in the Asian session. The pair posted considerable gains in European trade but has given up some of 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
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