GBP/USD is sharply lower in the Tuesday session. In North American trade, the pair is trading at 1.2946, down 0.70% on the day. On the release front, British BRC Retail Sales sparkled with a gain of 1.8%, compared to the estimate of -0.2%. British Services PMI dropped to 50.1, shy of the estimate of 51.1 points. In the U.S., ISM Non-Manufacturing PMI dipped to 56.,7 shy of the estimate of 57.2 points. Later on Tuesday, President Trump delivers the State of Union address before Congress. On Wednesday, Federal Reserve Chair Powell will speak at an event in Washington.
The British pound headed lower on Tuesday, falling below the symbolic 1.30 level for the first time since January 23. The catalyst was a soft score of 50.1 from services PMI, which points to stagnation in the services sector. This marked the weakest reading since July 2016. Respondents in the PMI survey pointed to the turmoil around Brexit as the reason for the slowdown in the services sector.
British Prime Minister May will meet with EU Commissioner Jean Paul Juckner on Thursday, in a crucial meeting over the Brexit withdrawal deal. With Britain and the EU at an impasse over the Irish border stopgap, both sides will have show some flexibility to reach a solution that May can pass through parliament. May has said she wants to change the stopgap rather than eliminate it, but it’s questionable if the Europeans will be in a giving mood. If the meeting is not a success, expect the blame game between Britain and the EU to intensify, which could further dampen investor sentiment and weigh on the British pound.
Monday (February 4)
- 19:01 British BRC Retail Sales Monitor. Estimate -0.2%. Actual 1.8%
Tuesday (February 5)
- 4:30 British Services PMI. Estimate 51.1. Actual 50.1
- 10:00 US ISM Non-Manufacturing PMI. Estimate 57.2. Actual 56.7
- Tentative – US IBD/TIPP Economic Optimism. Estimate 53.1
- 21:00 US President Trump State of the Union Address
Wednesday (February 6)
- 19:00 US Fed Chair Powell Speaks
*All release times are EST
*Key events are in bold
GBP/USD for Tuesday, February 5, 2019
GBP/USD February 5 at 12:20 EST
Open: 1.3036 High: 1.3054 Low: 1.2925 Close: 1.2944
GBP/USD was flat in the Asian session. The trend continued in European trade and the pair then posted slight losses. The downward movement has continued in North American trade
- 1.2910 is under pressure in support following sharp losses by GBP/USD on Tuesday
- 1.3070 is the next resistance line
- Current range: 1.2910 to 1.3070
Further levels in both directions:
- Below: 1.2910, 1.2851 and 1.2729
- Above: 1.3070, 1.3170 and 1.3258
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