GBP/USD – British pound hits 3-week high as US election weighs on greenback

GBP/USD has moved higher for a third straight session. In Wednesday’s North American session, the pair is trading at 1.3148, up 0.38% on the day. There are no key releases out of the U.S or the U.K, as the markets continue to digest the results of the U.S. midterm elections on Tuesday. On Thursday, the Federal Reserve will set the benchmark rate and release a rate statement. As well, the U.S. releases unemployment claims.

It’s been a quiet week for British releases, but that will change on Friday, when the U.K publishes Preliminary GDP and manufacturing production. This first GDP report for Q3 is expected to improve with a strong gain of 0.6%, after a 0.4% gain in Final GDP in the second quarter. A strong GDP release would likely boost the pound, which has enjoyed a strong November with gains of 1.43 percent. Traders should be prepared for some volatility from the pound in the Friday session.

All eyes were on the U.S mid-term elections, and when the dust settled, both parties could claim a victory of sorts. The Democrats regained control of the House of Representatives for the first time since 2010, but the Republicans increased their slim majority in the Senate. The results are a setback for President Trump, as the Democrats will be in a stronger position to derail Trump’s plans to boost fiscal stimulus and lower taxes. This could dampen enthusiasm for the U.S dollar, and investors have reacted on Wednesday by sending the greenback broadly lower. Investors will be shifting focus to the Federal Reserve, which releases its monthly rate statement on Thursday. The Fed is expected to maintain the benchmark rate at a range of between 2.0% and 2.25%. A hawkish rate statement could boost global equity markets.

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GBP/USD Fundamentals

Wednesday (November 7)

  • 3:30 British Halifax HPI. Estimate 0.5%. Actual 0.7%
  • 10:30 US Crude Oil Inventories. Estimate 2.0M
  • 13:01 US 30-year Bond Auction
  • 15:00 US Consumer Credit. Estimate 15.7B
  • 19:01 British RICS House Price Balance. Estimate -2%

Thursday (November 8)

  • 8:30 US Unemployment Claims. Estimate 214K
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.25%

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, November 7, 2018

GBP/USD November 7 at 10:40 EST

Open: 1.3099 High: 1.3174 Low: 1.3073 Close: 1.3146

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2812 1.2915 1.3048 1.3173 1.3301 1.3408

GBP/USD showed little movement in the Asian session. The pair edged higher in European trade and is steady in North American trade

  • 1.3048 is providing support
  • 1.3173 is the next resistance line
  • Current range: 1.3048 to 1.3173

Further levels in both directions:

  • Below: 1,3048, 1.2915, 1.2812 and 1.2723
  • Above: 1.3173, 1.3301 and 1.3408

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

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.