GBP/USD – British pound rebounds, investors eye Fed minutes

GBP/USD has gained ground in the Wednesday session, after posting considerable losses on Tuesday. In North American trade, the pair is trading at 1.2768, up 0.44% on the day. On the release front, there are no major British indicators. In the U.S., the key event is the minutes from the Fed policy meeting in December. On Thursday, the U.S. releases unemployment claims and Fed Chair Powell will speak at an event in Washington.

The pound remains relatively steady, but could this be the calm before the storm? Parliament is scheduled to debate and then vote on the Brexit withdrawal agreement next week, and tensions are running high ahead of the vote. Prime Minister May still faces an uphill battle to push the deal through parliament, as she must contend with opposition from the Labor party as well as part of her own Conservatives. If May fails to win the vote, a no-deal Brexit could be the result. This has raised alarm bells among business and industry leaders, who have said they will implement ‘public interventions’ to inform the public about the danger of a no-deal scenario, if May loses the vote in parliament. If Britain leaves the EU with no agreement in place, the economy is expected to weaken and the pound would likely fall.

Investor optimism is higher this week, as hopes are high that trade tensions between the U.S. and China could ease. The world’s two largest economies have been engaged in a nasty tariff spat, which has rocked the markets in recent weeks and threatens to put a chill on global growth. Chinese and U.S. officials were scheduled to hold a two day meeting at the start of the week, but the talks were extended for a third day on Wednesday. This has raised hopes that the sides are making progress. The stakes are high, as President Trump has threatened to impose higher tariffs on $250 billion worth of Chinese products if there is no deal by March 1. If the nasty trade war shows signs of easing, risk appetite could grow and make the safe-haven yen less attractive.

Rare winning streak continues into Wednesday

Trade talk optimism boosts risk

GBP/USD Fundamentals

Wednesday (January 9)

• 9:00 FOMC Member Evan Speaks
• 10:30 BoE Governor Carney Speaks
• 10:30 US Crude Oil Inventories. Estimate -2.4M. Actual -1.7M
• 11:30 US FOMC Member Rosengren Speaks
• 13:01 US 10-year Bond Auction
• 14:00 US FOMC Meeting Minutes
• 19:01 British BRC Retail Sales Monitor

Thursday (January 10)

• 8:30 US Unemployment Claims. Estimate 226K
  
• 12:00 US Fed Chair Powell Speaks

*All release times are EST

*Key events are in bold

GBP/USD for Wednesday, January 9, 2019

GBP/USD January 8 at 11:50 EST

Open: 1.2733 High: 1.2812 Low: 1.2699 Close: 1.2778

GBP/USD Technical

GBP/USD ticked higher in the Asian session. The pair has been marked by choppy trade in the European and North American sessions

• 1.2706 is providing support
• 1.2812 was tested earlier in resistance and is a weak line
• Current range: 1.2706 to 1.2812

Further levels in both directions:

• Below: 1.2706, 1.2589, 1.2488 and 1.2365
• Above: 1.2812, 1.2915 and 1.3047

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