GBP/USD is unchanged in the Thursday session, after sharp gains on Wednesday. In North American trade, the pair is trading at 1.2632, up 0.04% on the day. On the release front, there are no British events. In the U.S, unemployment claims dropped sharply to 206 thousand, well below the estimate of 226 thousand. On Friday, the U.S. releases retail sales reports, with the markets braced for a sharp drop in the November readings. Retail sales is expected to fall to 0.1% and core retail sales is forecast to drop to 0.2%.
The Brexit saga continues to capture the attention of the markets, with a new twist almost every day. On Wednesday, Prime Minister Theresa May survived an internal non-confidence motion in the Conservative party. However, one-third of Conservative MPs voted against May, leaving the prime minister in a weak position, ahead of a parliamentary vote on Brexit in the next few weeks. After being forced to withdraw a vote in parliament earlier this week, May is meeting with European leaders in Brussels on Thursday. For their part, the EU has said that the withdrawal agreement will not be reopened, which means that May will have a very difficult time passing the agreement in parliament. That could mean that Britain would leave the EU without a deal, which would have a chilling effect on the U.K. economy. The chaos and confusion surrounding Brexit are causing strong volatility in the British pound – the currency dropped 1.3% at the start of the week, but then reversed directions on Wednesday and climbed 1.1%.
In the U.S, CPI dropped to 0.0% in November, down from 0.3% a month earlier. This marked the lowest level since May. Core CPI remained pegged at 0.2 percent. The weak readings can be attributed to falling oil prices, which has led to a sharp decline in gasoline prices. On an annualized basis, inflation gained 2.2 percent in November, down from 2.5 percent in October. With the U.S. economy showing signs of slowing down, and the global trade war taking a bite out of the global economy, inflation could continue to head lower as we head into 2019. This has led to a reassessment at the Federal Reserve of monetary policy. Earlier in the year, the Fed was sending messages that it would raise rates three or four times next year. This has been drastically scaled back, with some analysts predicting only one rate hike in 2019.
Thursday (December 13)
- 8:30 US Unemployment Claims. Estimate 226K. Actual 206K
- 8:30 US Import Prices. Estimate -1.0%. Estimate -1.6%
- 10:30 US Natural Gas Storage. Estimate -81B. Actual -77B
- 13:01 US 30-year Bond Auction
- 14:00 US Federal Budget Balance. Estimate -193.5B
Friday (December 14)
- 8:30 US Core Retail Sales. Estimate 0.2%
- 8:30 US Retail Sales. Estimate 0.1%
- 9:30 British CB Leading Index
*All release times are EST
*Key events are in bold
GBP/USD for Thursday, December 13, 2018
GBP/USD December 13 at 11:45 EST
Open: 1.2628 High: 1.2687 Low: 1.2610 Close: 1.2632
GBP/USD ticked lower in the Asian session. The pair edged higher in European trade and has given up some of these gains in North American trade
- 1.2589 is providing support
- 1.2706 is the next resistance line
- Current range: 1.2589 to 1.2706
Further levels in both directions:
- Below: 1.2589, 1.2488, 1.2365 and 1.2229
- Above: 1.2706, 1.2812 and 1.2915
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