GBP/USD – British pound shrugs as retail sales spike

GBP/USD has posted slight gains in the Thursday session. In North American trade, the pair is trading at 1.2634, up 0.18% on the day. On the release front, British retail sales sparkled with a gain of 1.4%, crushing the estimate of 0.3%. There were no surprises as the Bank of England maintained the benchmark rate at 0.75 percent for a fourth straight month. British CBI Realized Sales plunged to -13, well off the forecast of 16 points. In the U.S., unemployment claims rose to 214 thousand, just under the forecast of 216 thousand. The Philly Fed Manufacturing Index dropped sharply to 9.4 in November, down from 12.9 a month earlier. This was the lowest level since November 2016. Friday will be busy on both sides of the pond. The U.K. releases current account and GDP, and the U.S. will publish Final GDP, durable goods orders.

The handwringing over Britain’s imminent exit from the European Union was on hold for a day, as investors kept on eye on the Bank of England and retail sales. However, Brexit will be back in the headlines, as Prime Minister May tries to save the withdrawal agreement and her job. May is facing a skeptical parliament and has failed to get a lifeline from EU leaders, who are fed up with the tortuous debate over Brexit in the U.K. Earlier this week, Prime Minister May announced that parliament will vote on the Brexit withdrawal agreement in mid-January, and with a no-deal scenario a very real possibility, traders can expect further volatility from the British pound in the coming weeks.

The markets had hoped that the Fed would be in a giving mood, in the form of dovish rate statement, given the dismal performance the markets recently. However, investors were massively disappointed, as Fed policymakers signaled that it planned to continue raising rates in 2019. Policymakers did not remove the phrase “further gradual increases” from their statement, and Fed Chair Jerome Powell added that the “lower end” of the neutral rate range has been achieved. Investors had counted on a more dovish stance from the Fed and responded with a thumbs-down, sending the U.S. dollar broadly lower on Thursday.

A not so dovish hike by the Fed

All about the FED and the discussions go on.

GBP/USD Fundamentals

Thursday (December 20)

• 4:30 British Retail Sales. Estimate 0.3%. Actual 1.4%
• 4:30 British CBI Realized Sales. Actual -13
• 7:00 BoE Official Bank Rate Votes. Estimate 0-0-9. Actual 0-0-9
• 7:00 BoE Monetary Policy Summary
• 7:00 BoE Official Bank Rate. Estimate 0.75%. Actual 0.75%
• 7:00 British Asset Purchase Facility. Estimate 435B. Actual 435B
• 7:00 British Asset Purchase Facility Votes. Estimate 0-0-9. Actual 0-0-9
• 8:30 US Philly Fed Manufacturing Index. Estimate 15.6. Actual 9.1
• 8:30 US Unemployment Claims. Estimate 216K. Actual 214K
• 10:00 US CB Leading Index. Estimate 0.0%
• 10:30 US Natural Gas Storage. Estimate -136B
• 19:01 British GfK Consumer Confidence

*All release times are EST

*Key events are in bold

GBP/USD for Thursday, December 20, 2018

GBP/USD December 20 at 11:00 EST

Open: 1.2639 High: 1.2679 Low: 1.2607 Close: 1.2634

GBP/USD Technical

GBP/USD inched higher in the Asian session. The pair posted strong gains in European trade but gave up some of these gains. The downward movement has continued 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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