GBP/USD – Pound Rebounds, U.S Consumer Confidence Ahead

The British pound has recorded gains on Friday, erasing the losses seen in the Thursday session. In the North American session, GBP/USD is trading at 1.3564, up 0.34% on the day. On the release front, there are no British events, after a very busy Thursday. In the U.S, the markets are expecting UoM Consumer Sentiment to improve to 98.4 points.

The pound showed little movement on Thursday, as the Bank of England held the benchmark interest rate at 0.50 percent. As expected, two of nine MPC members voted for an immediate rate hike. In the BoE inflation report, policymakers noted concern over softness in consumer borrowing and the housing market. The markets were not surprised by the BoE decision, given the fact that first-quarter growth was just 0.1% and consumer spending and inflation levels weakened. On Friday, there was no relief from the NIESR GDP Estimate, which indicated a 0.1% expansion of the economy in April. Will economic growth rebound in the second quarter? Policymakers are adopting a wait-and-see attitude towards rate hikes, with any increase unlikely before August, which is when the next inflation report will be released.

Key U.S indicators were mixed on Thursday. Unemployment claims impressed, remaining unchanged at 211 thousand. This easily beat the estimate of 219 thousand. The US labor market is at near or full employment, which has resulted in a slowdown in job growth due to a shortage of skilled labors. Earlier in the week, JOLTS Job Openings climbed to a record 6.6 million. At the same time, inflation levels remain low, as the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. According to the CME Group, the odds that the Fed will press the rate trigger at the June meeting stand at 100%.

U.S CPI takes the dollar off the boil

GBP/USD Fundamentals

Friday (May 11)

  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.4
  • 10:00 US Preliminary UoM Inflation Expectations

*All release times are DST

*Key events are in bold

GBP/USD for Friday, May 11, 2018

GBP/USD May 11 at 7:35 DST

Open: 1.3518 High: 1.3582 Low: 1.3502 Close: 1.3564

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3301 1.3402 1.3494 1.3613 1.3712 1.3796

GBP/USD ticked higher in the Asian session and has edged upwards in European trade

  • 1.3494 is providing support
  • 1.3613 is the next resistance line
  • Current range: 1.3494 to 1.3613

Further levels in both directions:

  • Below: 1.3494, 1.3402, 1.3301 and 1.3186
  • Above: 1.3613, 1.3712 and 1.3796

OANDA’s Open Positions Ratio

GBP/USD ratio is showing little movement in the Friday session. Currently, long positions have a majority (63%), indicative of trader bias towards GBP/USD continuing to head upwards.

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.