GBP/USD – Brexit drama fails to dent plucky pound

GBP/USD has posted slight gains in the Thursday session. In North American trade, the pair is trading at 1.2900, up 0.16% on the day. On the release front, the BoE released its Credit Conditions survey for the fourth quarter. In the U.S., unemployment claims dropped to 213 thousand, below the forecast of 219 thousand. This marked a 5-week low. There was more good news from the U.S. economy, as Philly Fed Manufacturing Index jumped to 17.0, crushing the estimate of 9.7 points. On Friday, the U.K. releases Retail Sales and the U.S. will post UoM Consumer Sentiment.

There was plenty of drama in the British parliament this week. On  Tuesday, Prime Minister May suffered a humiliating defeat, as lawmakers voted down the Brexit withdrawal deal by over 200 votes. On Thursday, May survived a no-confidence vote, but the margin of victory was a mere 19 votes. Next, May must come up with a new plan and submit it to parliament by Monday, with lawmakers voting on the plan a week later. There is plenty of uneasiness at the uncertainty surrounding Brexit, but the British pound continues to move higher. GBP/USD has rolled off four straight winning weeks, and has posted gains this week, despite the turmoil over Brexit. Traders can expect more volatility from the pound next week, as the Brexit saga continues.

With the government shutdown in the U.S. in its fourth week, the flow of government economic data has been reduced. This has magnified the importance of the Beige Book, which was released on Wednesday. The report found that businesses across the country had become less optimistic, due to higher interest rates, swings in the financial markets and global trade tensions. At the same time, most of the regional Feds said that growth in their region was “modest to moderate”. The report reiterates the recent dovish stance we are seeing from the Federal Reserve, which has sent strong signals to the markets that rate hikes could be on hold for the near future.

May back in Brexit talks after dramatic 48 hours

Risk appetite slips, Brexit, U.S trade and government shutdown in focus

GBP/USD Fundamentals

Thursday (January 17)

• 4:30 BoE Credit Conditions Survey
• 8:30 US Philly Fed Manufacturing Index. Estimate 9.7. Actual 17.0
  
• 8:30 US Unemployment Claims. Estimate 219K. Actual 213K
• 10:30 US Natural Gas Storage. Estimate -73B
• 10:45 US FOMC Member Quarles Speaks

Friday (January 18)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.0

*All release times are EST

*Key events are in bold

GBP/USD for Wednesday, January 17, 2019

GBP/USD January 17 at 11:05 EST

Open: 1.2880 High: 1.2924 Low: 1.2832 Close: 1.2900

GBP/USD Technical

GBP/USD showed little movement in the Asian session. The pair edged higher in the European session and is steady in the North American session

• 1.2812 is providing support
• 1.2915 was tested earlier in resistance and is a weak line
• Current range: 1.2812 to 1.2815

Further levels in both directions:

• Below: 1.2812, 1.2706, 1.2589 and 1.2488
• Above: 1.2915, 1.3047 and 1.3174

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