GBP/USD – British slips below 1.32 as Brexit confusion continues

GBP/USD has posted considerable losses in the Wednesday session. In North American trade, the pair is trading at 1.3200, down 0.50% on the day. On the fundamental front, British CPI edged up to 1.9%, compared to 1.8% a month earlier. In the U.S., the Federal Reserve will issue a rate statement at the conclusion of a 2-day policy meeting.

The Brexit saga continues, full of twists and turns. Prime Minister May has said she wants a 3-month extension on Brexit, which would mean Britain departs the E.U. at the end of June. The exasperated Europeans have not said if they will agree, but a senior official said that the E.U. would prefer a much longer delay. On Tuesday, the government cancelled a parliamentary vote on the withdrawal agreement after House Speaker John Bercow ruled that parliament would not vote on the deal unless it was substantially different than the text that had already been voted on twice. This ruling is another blow to Prime Minister May, whose authority has been badly shaken by the recent votes in parliament.

British employment numbers were a mix on Tuesday. Wage growth continues to impress, posting a gain of 3.4% for a third successive month. The unemployment rate dipped to 3.9%, its lowest level since 1975. However, unemployment claims jumped to 27 thousand, marking a 10-month high. All in all, the employment picture remains solid, despite the turmoil of Brexit and the political and economic uncertainties that lie ahead.

The Federal Reserve is virtually certain to hold the benchmark rate at the Wednesday meeting, but traders should nonetheless treat the meeting as a market-mover. Policymakers have been sending out dovish messages, and if the Fed reaffirms that it will remain cautious and patient, the dollar could lose ground. The Fed’s balance sheet will also be under scrutiny, with the policymakers expected to announce when they will stop reducing the $4 billion balance sheet. The central bank has been reducing assets by $50 billion a month, but there has been criticism that this tightening is choking economic growth. The Fed will also publish its new dot plot, a quarterly release which is used to convey its interest rate outlook.

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GBP/USD Fundamentals

Wednesday (March 20)

  • 5:30 British CPI. Estimate 1.8%. Actual 1.9%
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.50%
  • 14:00 US FOMC Press Conference

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, March 20, 2019

GBP/USD March 20 at 13:10 DST

Open: 1.3266 High: 1.3274 Low: 1.3147 Close: 1.3200

GBP/USD Technical

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

GBP/USD was flat in the Asian session and posted considerable losses in European trade. GBP/USD has edged higher in the North American session

  • 1.3170 is providing support
  • 1.3258 is the next resistance line
  • Current range: 1.3170 to 1.3258

Further levels in both directions:

  • Below: 1.3170, 1.3070 and 1.2910
  • Above: 1.3258, 1.3362, 1.3460 and 1.3539

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.