GBP/USD – British pound under pressure as Brexit turmoil continues

GBP/USD has steadied in the Wednesday session, after losing close to 1.0% so far this week. In North American trade, the pair is trading at 1.3072, up 0.04% on the day. In the U.K., the BRC Shop Price Index gained 0.4%, its strongest reading since April 2013.  Net Lending to Individuals jumped to GBP 4.8 billion, well above the estimate of GBP 4.3 billion. Later in the day, British consumer confidence is expected to post a weak score of -14 points. In the U.S., the highlight is the Federal Reserve rate statement. With the Fed expected to remain on the sidelines, investors will be focusing on the rate statement, which is expected to be dovish in tone. The ADP nonfarm employment change fell to 213 thousand, but managed to beat the forecast of 180 thousand. On Thursday, the U.S. publishes Employment Cost Index and unemployment claims.

After a tumultous session in parliament, the Brexit outlook remains as unclear as ever. Lawmakers voted against a no-deal scenario (although this is not binding) and instructed Prime Minister May to go back to Brussels to renegotiate the Irish backstop provision. However, the EU has insisted it will not reopen the withdrawal deal. On Tuesday, an EU official expressed dismay over the Brexit wrangling, saying that “London has negotiated with itself more than the EU.” The May government has refused to put a no-deal Brexit off the table, in part to keep pressure on the EU to show some flexibility and avoid a no-deal scenario, which would be detrimental to the eurozone as well as the U.K.

The Federal Reserve was aggressive in 2018, raising rates by a quarter-point on four occasions. With a nasty trade war dampening global economic growth, it is clear that the Fed will ease up on monetary policy this year. But, by how much? There are a various answers, depending on who you ask. The markets are not expecting any increases this year, while the Federal Reserve continues to stick with a forecast of two hikes. The Congressional Budget Office has also weighed in, saying that it expects further rate increases this year. Investors will be combing through the rate statement, looking for clues as to the timing of the next rate hike.

Another symbolic and pointless day in parliament

Sterling slumps after Brexit shenanigans

GBP/USD Fundamentals

Tuesday (January 29)

• 19:01 British BRC Shop Price Index. Actual 0.4%

Wednesday (January 30)

• 4:30 British Net Lending to Individuals. Estimate 4.3B. Actual 4.8B
  
• 4:30 British M4 Money Supply. Estimate 0.2%. Actual 0.4%
• 4:30 British Mortgage Approvals. Estimate 63K. Actual 64K
• 8:15 US ADP Nonfarm Employment Change. Estimate 180K. Actual 213K
  
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <2.50%
• 14:30 US FOMC Press Conference
• 19:01 British GfK Consumer Confidence. Estimate -14

Thursday (January 31)

• 8:30 US Employment Cost Index. Estimate 0.8%
• 8:30 US Unemployment Claims. Estimate 215K

*All release times are EST

*Key events are in bold

GBP/USD for Wednesday, January 30, 2019

GBP/USD January 30 at 10:55 EST

Open: 1.3068 High: 1.3121 Low: 1.3054 Close: 1.3072

GBP/USD Technical

GBP/USD showed little movement in the Asian session. The pair posted gains in European trade but then retracted. The downward movement continues in North American trade

• 1.3070 is a fluid line. Currently, it is a weak support line
• 1.3170 is the next resistance line
• Current range: 1.3070 to 1.3170

Further levels in both directions:

• Below: 1.3070, 1.3000 and 1.2910
• Above: 1.3170, 1.3258 and 1.3375

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