GBP/USD – British pound slide continues as cable drops below 1.30

GBP/USD has posted losses for a third straight day. In Wednesday’s North American session, the pair is trading at 1.2999, down 0.57% on the day. On the release front, there are no major events in the U.K. or the U.S. On Thursday, the U.S. releases producer price index reports and unemployment claims.

The Bank of England has sent out a message of a bias towards tightening rates, but is anybody listening? Last week BoE Governor Mark Carney that current markets expectations of future rate hikes were too modest. This hawkish stance failed to catch the attention of investors and the pound didn’t jump at the BoE’s command. Instead, GDP/USD has declined 1.25% so far this week and is testing the symbolic 1.30 level. The BoE has raised its forecast for U.K growth to 1.5%, up from the previous forecast of 1.2% and inflation is hovering close to the BoE’s target of 2.0%. With these healthy numbers, investors are not expecting rate hikes anytime soon, especially with the lingering uncertainty over Brexit.

With Brexit extended until October, the focus is now on Theresa May – will she survive as Prime Minister? There are growing calls on May to set a resignation date, and that end-date could be hastened if she reaches a cross-party deal with the Labor party. There has been speculation that May is looking to enter a new customs union with Brussels, infuriating many of her Tory colleagues, who see such an arrangement has blocking the U.K. from pursuing an independent trade policy. Brexit talks between London and Brussels are set to resume, but the track record indicates that the parties will have a tough time closing the gaps in their positions.

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GBP/USD Fundamentals

Wednesday (May 8)

  • 3:30 British Halifax HPI. Estimate 0.3%. Actual 1.1%
  • 4:15 British MPC Member Ramsden Speaks
  • 8:30 US FOMC Member Brainard Speaks
  • 10:30 US Crude Oil Inventories. Estimate 1.1M. Actual -4.0M
  • 13:01 US 10-year Bond Auction
  • 19:01 British RICS House Price Balance. Estimate -22%

Thursday (May 9)

  • 8:30 US PPI. Estimate 0.2%.
  • 8:30 US Core PPI. Estimate 0.2%.
  • 8:30 US Unemployment Claims. Estimate 215K

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, May 8, 2019

GBP/USD May 8 at 11:25 DST

Open: 1.3073 High: 1.3080 Low: 1.2987 Close: 1.2999

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2730 1.2841 12910 1.3000 1.3070 1.3217

GBP/USD was flat in the Asian session. The pair posted considerable losses in European trade and is flat in the North American session

  • 1.2910 is providing support
  • 1.3000 is fluid. Currently, it is a weak resistance line
  • Current range: 1.2910 to 1.3000

Further levels in both directions:

  • Below: 1.2910, 1.2841 and 1.2730
  • Above: 1.3000, 1.3070, 1.3170 and 1.3217

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.