GBP/USD – British pound edges higher, investors eye U.K wage growth

GBP/USD has lost ground in the Monday session. In North American trade, the pair is trading at 1.2928, up 0.30% on the day. On the release front, British Rightmove HPI improved in February, with a gain of 0.7%. There are no U.K. or U.S. events on Monday, and U.S. banks are closed for a holiday. On Tuesday, the U.K. releases wage growth and unemployment claims.

The pound is under pressure, as the currency posted its third successive weekly loss. The slide would have been even worse, if not for an unexpectedly strong retail sales report on Friday. The January reading rebounded with a strong gain of 1.9%, after a decline of 0.7% in December. However, other key indicators disappointed, raising concerns about the U.K. economy. British CPI slowed to 1.8% in January, falling below the 2.0% level for the first time since January 2017. Inflation has now dropped for three successive months. This was underscored by soft GDP data earlier in the week. GDP for Q4 slowed to 0.2%, and the monthly GDP reading for December has raised alarm bells, with a decline of 0.4%. The British pound is down 1.4% in February, as nervous investors shake their heads over the turmoil surrounding Brexit. Prime Minister May and her European counterparts have all said they don’t want to see Britain crash out of the EU without a deal, but that seems to be the extent of any consensus between London and Brussels.

Is the U.S. economy slowing down? There are concerns about the strength of the economy, after soft consumer data in January. Retail sales and core retail sales showed sharp contraction, and these numbers came on the heels of soft inflation indicators. Inflation remains low, despite a strong labor market. CPI showed no change in January and has failed to post a gain since November. Core CPI has recorded weak gains of 0.2% for four successive months. On an annualized basis, CPI gained 1.6% in January, the weakest year-over-year gain since mid-2017. The soft inflation numbers were a result of low energy prices, which fell 3.1% in January as oil prices remain under pressure.

Markets in long-weekend slumber

Regional markets to have their say on President’s Day

GBP/USD Fundamentals

Sunday (February 17)

  • 19:01 British Rightmove HPI. Actual 0.7%

Monday (February 18)

  • There are no U.K. or U.S. events

Tuesday (February 19)

  • 4:30 British Average Earnings. Estimate 3.5%
  • 4:30 British Claimant Change. Estimate 12.3K
  • 4:30 British Unemployment Rate. Estimate 4.0%

*All release times are EST

*Key events are in bold

GBP/USD for Monday, February 18, 2019

GBP/USD February 18 at 11:15 EST

Open: 1.2890 High: 1.2939 Low: 1.2890 Close: 1.2928

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2729 1.2851 1.2910 1.3070 1.3170 1.3258

GBP/USD has posted small gains in the Asian and European sessions. GBP/USD is showing little movement in North American trade

  • 1.2729 is providing support
  • 1.2851 is the next resistance line
  • Current range: 1.2729 to 1.2851

Further levels in both directions:

  • Below: 1.2910, 1.2851, 1.2729 and 1.2615
  • Above: 1.3070, 1.3170 and 1.3258

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.