GBP/USD – British pound soars amid Brexit chaos

GBP/USD continues to show volatility this week. In Wednesday’s North American session, the pair is trading at 1.3212, up 1.04% on the day. In economic news, there are no British indicators on the calendar. The government released its annual budget, and parliament votes on whether Britain should leave the E.U. without an agreement in place. in the U.S.,

The Brexit saga continues, as Prime Minister May suffered another defeat in parliament on Tuesday. Lawmakers once again overwhelmingly rejected the government’s withdrawal proposal, despite extensive lobbying by May. Many conservative lawmakers remain skeptical about the Irish backstop proposal, suspicious that the provision will prevent Britain from departing from the European Union. Later on Wednesday, parliament votes on a no-deal Brexit. If this proposal is rejected, lawmakers would vote again on Thursday on a request to extend Article 50, the mechanism for Brexit. However, it’s far from clear how long the delay would last, or if the E.U. would agree to an extension. The uncertainty over Brexit could sour investors on the pound, although the currency has posted sharp gains on Wednesday.

In the U.S., consumer inflation remains soft, which means there is little pressure on policymakers to raise rates in the near future. In February, Core CPI edged down to 0.1%, while CPI remained steady at 0.2%. Consumer inflation remains well below the Federal Reserve’s target of 2.0 percent, so there is little pressure on the Fed to raise rates anytime soon. Policymakers have been signaling that the Fed could stay on the sidelines until the second half of 2019, and this stance was underscored by Fed Chair Powell in a television interview on Sunday. Powell left no doubt about where the Fed stands, saying that the Fed would remain patient and was in no hurry to change interest rate policy. The dovish stance of the Fed could weigh on the dollar, as a lack of rate hikes makes the greenback less attractive to investors.

Pound steadies ahead of next Brexit vote

Global markets gently simmer

Brexit and Trade Continue to Weigh on Growth Concerns

GBP/USD Fundamentals

Wednesday (March 13)

  • 8:30 US Core Durable Goods Orders. Estimate 0.1%. Actual -0.1%
  • 8:30 US Durable Goods Orders. Estimate -0.5%. Actual 0.4%
  • 8:30 US PPI. Estimate 0.2%. Actual 0.1%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.1%
  • 8:42 British Annual Budget Release
  • 10:00 US Construction Spending. Estimate 0.4%. Actual 1.3%
  • 10:30 US Crude Oil Inventories. Estimate 2.7M. Actual -3.9M
  • 13:01 US 30-year Bond Auction
  • 20:01 RICS House Price Balance. Estimate -24%
  • Tentative – Parliament Brexit Vote. Estimate – Reject

Thursday (March 14)

  • 8:30 US Unemployment Claims. Estimate 225K
  • 10:00 US New Home Sales. Estimate 622K
  • Tentative – Parliament Brexit Vote

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, March 13, 2019

GBP/USD March 13 at 11:50 DST

Open: 1.3077 High: 1.3217 Low: 1.3061 Close: 1.3212

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2910 1.3070 1.3170 1.3258 1.3362 1.3460

GBP/USD ticked higher in the Asian session. The pair recorded considerable gains in European trade and the upward movement continues in the North American session.

  • 1.3170 has switched to support after sharp gains by GBP/USD on Wednesday
  • 1.3258 is the next resistance line
  • Current range: 1.3170 to 1.3258

Further levels in both directions:

  • Below: 1.3170, 1.3070, 1.2910 and 1.2831
  • Above: 1.3258, 1.3362 and 1.3460

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.