GBP/USD – British pound rally takes pause as U.S GDP beats expectations

GBP/USD has paused on Thursday, after recording gains throughout the week. In the North American session, the pair is trading at 1.3296, down 0.10% on the day. In economic news, there are no major British events. In the U.S., Advance GDP expanded 2.6% in the fourth quarter, above the estimate of 2.2%. Chicago PMI climbed to 64.7, easily beating the forecast of 57.3 points. Unemployment claims rose to 225 thousand, above the estimate of 221 thousand. On Friday, the U.S. will release Core PCE Price Index and UoM Consumer Sentiment. On Friday, the U.K. releases Manufacturing PMI and Net Lending to Individuals. The U.S. will release Core PCE Price Index and UoM Consumer Sentiment.

With the clock ticking down towards Brexit Day on March 29, there is a flurry of activity in Westminster. Earlier in the week, Prime Minister May made headlines when she announced another vote on the government’s withdrawal agreement, which is scheduled for March 12. If lawmakers reject that proposal, they will vote the next day on two separate proposals – one on a no-deal Brexit, and the second on requesting the EU to extend Article 50 and delay Brexit past March 29. Investors are confident that this makes a no-deal scenario even more unlikely, which has resulted in gains of 2.0% for the pound this week. However, with plenty of turmoil and uncertainty around the Brexit withdrawal, we could see volatility from the pound in the days leading to the parliamentary votes.

The Federal Reserve’s new dovish stance was reinforced by Fed Chair Powell’s testimony on Capitol Hill on Tuesday and Wednesday. Powell preached patience with regard to changes in interest rate levels. The Fed chair stated that the Fed was in “no rush to make a judgment” and made reference to “conflicting signals in the economy”. The labor picture remains bright, with strong hiring and low unemployment. At the same time, consumer spending and business investment have been soft. Powell was optimistic about the U.S. economy, but said that the lower global growth and uncertainty over trade was weighing on the economy. The markets are expecting the Fed to remain on the sidelines in May and June, meaning that the first hike of 2019 may be on hold until the second half of the year.

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GBP/USD Fundamentals

Thursday (February 28)

• 1:58 British Nationwide HPI. Estimate -0.1%. Actual -0.1% 
• 8:00 US FOMC Member Clarida Speaks
• 8:30 US Advance GDP. Estimate 2.2%. Actual 2.6%
  
• 8:30 US Advance GDP Price Index. Estimate 1.7%. Actual 1.8%
• 8:30 US Unemployment Claims. Estimate 221K. Actual 225K
  
• 9:45 US Chicago PMI. Estimate 57.3. Actual 64.7
  
• 10:30 US Natural Gas Storage. Estimate -172B
• 20:15 US Fed Chair Powell Speaks

Friday (March 1)

• 4:30 British Manufacturing PMI. Estimate 52.0
• 4:30 British Net Lending to Individuals. Estimate 4.7B
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate -0.2%
• 10:00 US ISM Manufacturing PMI. Estimate 55.6
• 10:00 US UoM Consumer Sentiment. Estimate 95.8

*All release times are EST

*Key events are in bold

GBP/USD for Thursday, February 28, 2019

GBP/USD February 28 at 10:55 EST

Open: 1.3309 High: 1.3320 Low: 1.3264 Close: 1.3296

GBP/USD Technical

GBP/USD was flat in the Asian session. The pair posted showed limited movement in the European session and is flat in North American trade

• 1.3258 is providing support
• 1.3362 is the next resistance line
• Current range: 1.3258 to 1.3362

Further levels in both directions:

• Below: 1.3258, 1.3170, 1.3070 and 1.2910
• Above: 1.3362, 1.3460 and 1.3350

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