GBP/USD – Pound Ticks Lower, Investors Eye British CPI

The British pound has posted small losses in the Monday session. In North American trade, GBP/USD is trading at 1.3809, down 0.14% on the day. On the release front, there are no British data releases on the schedule. The US federal budget is expected to rebound and show a large surplus of $50.2 billion. The last time the federal government posted a surplus was in September. On Tuesday, the UK releases a host of inflation indicators, led by CPI.

It was the Bank of England’s turn to be in the spotlight on Thursday. The BoE made no changes to interest rates or quantitative easing, and both moves were unanimous (9-0). There was some surprise however, at the hawkish tone of policymakers, who said that interest rates could rise “earlier” and by a “somewhat greater extent” than they predicted at their previous meeting in November. Bottom line? We could see an interest rate in the first half of 2018, with analysts circling May as the most likely date. At the same time, the effect that Brexit is having on the economy is difficult to predict, and if the economic conditions worsen, the BoE could delay a rate hike. The hawkish message from the BoE pushed the British pound above the 1.40 level, but the upward swing didn’t last, as the pound had to settle for small gains on Thursday.

It’s a quiet start to the week in the US, and the US dollar has been generally subdued. That will likely change on Wednesday, with the release of inflation and retail sales reports. The markets will be glued to the inflation indicators, as last week’s stock market slide was triggered by concern that higher inflation would lead to additional rate hikes from the Federal Reserve and other central banks. If inflation numbers are higher than expected, we could see some volatility from the US dollar as well as the stock markets.

GBP/USD Fundamentals

Monday (February 12)

  • 4:50 MPC Member Gertjan Vlieghe Speaks
  • 11:30 MPC Member McCafferty Speaks
  • 14:00 US Federal Budget Balance. Estimate 50.2B

Tuesday (February 13)

  • 4:30 British CPI. Estimate 2.9%

*All release times are GMT

*Key events are in bold

 

GBP/USD for Monday, February 12, 2018

GBP/USD February 12 at 11:30 EDT

Open: 1.3828 High: 1.3876 Low: 1.3796 Close: 1.3809

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3613 1.3744 1.3809 1.3901 1.4010 1.4128

GBP/USD posted gains in the Asian session but gave these up in European trade. The pair is steady in North American trade

  • 1.3809 was tested earlier in support and is under strong pressure. It could break in the North American session
  • 1.3901 has some breathing room in resistance following losses by GBP/USD on Friday

Current range: 1.3809 to 1.3901

Further levels in both directions:

  • Below: 1.3809, 1.3744, 1.3613
  • Above: 1.3901, 1.4010, 1.4128 and 1.4271

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is showing short positions with a majority (56%). This is indicative of trader bias towards GBP/USD continuing to lose ground.

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.

US Futures Higher After Second Plunge This Week

Indices Remain Vulnerable After Entering Correction

US futures are trading slightly in the green ahead of the open on Friday, a day after stock markets once again tumbled leaving indices in correction territory.

As we saw on Thursday, this isn’t necessarily indicative of calm returning to the markets. The Dow recorded declines of more than 1,000 points for the second time this week, having never done so before, despite futures prior to the open being relatively unchanged on the previous days close.

Equities Lose $5 Trillion as Bulls Slay Bulls

Clearly there remains a lot of volatility and nervousness in the markets and I don’t expect this to ease up heading into the weekend. Stock markets will likely remain vulnerable to further shocks heading into today’s close and possible even next week. That said, with a 10% correction having now completed, I wonder whether investors will now start looking to buy the dips as the fundamental backdrop remains strong.

OANDA fxTrade Advanced Charting Platform

US Congress Passes Funding Bill Ending Brief Government Shutdown

On a more positive note, the House and the Senate approved a new funding bill in the early hours of Friday morning that will see the government through to 23 March and increase spending limits for two years, ending a showdown that came into effect overnight.

Markets haven’t been too concerned about the prospect of a shutdown since the start of the year despite two having now taken place so I don’t expect to see any boost now that a deal has been reached. This is merely just another self-inflicted risk that’s been temporarily averted.

CAC Loses Ground as Global Sell-Off Continues

Sterling Dips After Worrying Manufacturing Data

It’s a slightly quieter day in terms of notable economic events. The Canadian jobs data will be of interest given that the central bank has been relatively aggressively raising interest rates over the last six months. The UK GDP estimate from NIESR will also be of interest, given that the pound has continued to rise even as the economy experiences a notable slowdown.

The manufacturing and industrial production figures from the UK this morning showed another dip in December, with the latter in particular experiencing no year on year growth. Given that these are among the areas that have benefited since the referendum, it may be a minor concern. The pound dipped after the releases having failed to hold above 1.40 against the dollar in recent days.

GBPUSD Daily Chart

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD – Pound Gains Ground as BoE Hints at Rate Increase

The British pound has posted gains in the Thursday session, erasing the losses seen on Wednesday. In North American trade, GBP/USD is trading at 1.3919, up 0.29% on the day. On the release front, the Bank of England maintained interest rates at 0.50%, but hinted at earlier and larger rate hikes. In the US, unemployment claims dropped to a sparkling 221 thousand, well below the estimate of 232 thousand.

The BoE was in the spotlight on Thursday. The Bank made no changes to interest rates or quantitative easing, and both moves were unanimous (9-0). There was some surprise however, at the hawkish tone of policymakers, who said that interest rates could rise “earlier” and by a “somewhat greater extent” than they predicted at their previous meeting in November. Bottom line? We could see an interest rate in the first half of 2018, with analysts circling May as the most likely date. At the same time, the effect that Brexit is having on the economy is difficult to predict, and if the economic conditions worsen, the BoE could delay a rate hike.

Pound jumps on ‘Hawkish’ BoE

It’s been a rough week for the pound, which is down 1.5 percent. The US dollar has posted gains against the pound and the other majors, after a massive sell-off on global stock markets on Monday. The sell-off was precipitated by strong US nonfarm payrolls and wage growth reports on Friday. This triggered concerns that higher inflation was on the way, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of other currencies. If the turbulence in the stock markets continue, the pound could resume its downward movement.

 

GBP/USD Fundamentals

Thursday (February 8)

  • 7:00 BoE Inflation Report
  • 7:00 MPC Official Bank Rate Votes. Estimate 0-0-9. Actual 0-0-9
  • 7:00 BoE Monetary Policy Summary
  • 7:00 BoE Official Bank Rate. Estimate 0.50%. Actual 0.50%
  • 7:00 BoE Inflation Letter
  • 7:00 MPC Asset Purchase Facility Votes. Estimate 0-0-9. Actual 0-0-9
  • 7:00 British Asset Purchase Facility. Estimate 435B. Actual 435B
  • 8:30 US Unemployment Claims. Estimate 232K. Actual 221K
  • 10:00 US Mortgage Delinquencies. Actual 5.17%
  • 10:30 US Natural Gas Storage. Estimate -116B. Actual -119B
  • 13:01 US 30-year Bond Auction

*All release times are GMT

*Key events are in bold

GBP/USD for Thursday, February 8, 2018

GBP/USD February 8 at 12:20 EDT

Open: 1.3880 High: 1.4067 Low: 1.3846 Close: 1.3918

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3744 1.3809 1.3901 1.4010 1.4128 1.4271

GBP/USD ticked upwards in the Asian session. In European trade, the pair posted slight losses but reversed directions and made strong gains in European trade. In the North American session, the pair posted slight gains but has changed directions and is moving lower.

  • 1.3901 is providing support
  • 1.4010 was tested in resistance earlier on Thursday

Current range: 1.3901 to 1.4010

Further levels in both directions:

  • Below: 1.3901, 1.3809, 1.3744, 1.3613
  • Above: 1.4010, 1.4128 and 1.4271

OANDA’s Open Positions Ratio

GBP/USD ratio is showing movement towards short positions. Currently, short positions have a majority (55%), indicative of trader bias towards GBP/USD reversing directions and moving lower.

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.

Calm Returns to Markets Ahead of BoE Event

US Futures Flat After Uneventful Session in Europe

A sense of calm appears to be gradually returning to financial markets as we near the end of the week, with indices in Europe trading a little lower and US futures flat after ending Wednesday’s session in a similar manner.

While volatility in the markets has eased over the last couple of days, it has remained at very high levels which is probably a sign of the ongoing nervousness among investors which may leave markets vulnerable to further declines. Still, the European session has so far been relatively uneventful compared to the last few days which may be a positive sign ahead of the open in the US.

The sell-off on Monday was widely attributed to rising yields on the back of higher interest rate expectations in the US and Europe, although it was likely exacerbated by a combination of other factors, such as automated trading and fear of a broader correction given how long it had been since the last. It’s interesting then that while yields fell after the stock market sell-off, they have been creeping higher again and now find themselves not far from the levels they were at on Monday. Should we avoid another plunge in stocks, it would suggest that yields may have been the catalyst but ultimately, the selling that followed was driven by other factors, perhaps including a belief that a correction was overdue.

Are BoE Interest Rate Expectations Too Bullish?

Will Carney Adopt Cautious Approach Given Market Volatility?

It will be very interesting to see what approach the Bank of England takes when it holds its quarterly press conference later on, given the recent market volatility. Central banks typically approach these events with incredible caution due to the ability of a seemingly harmless comment to cause excessive swings as traders pick apart everything that’s said.

Governor Mark Carney may have to be extra careful today then, particularly if the BoE is planning to lay the foundation for a rate hike this year, with an increasing number of people suggesting one will come in May. I remain unconvinced by this given the amount of economic uncertainty, soft economic data and the fact that inflation is believed to have peaked. Should the new forecasts contain an upgrade to the inflation outlook then perhaps this will nudge policy makers towards raising interest rates again.

GBPUSD Daily Chart

OANDA fxTrade Advanced Charting Platform

With no change in interest rates expected, traders will be paying very close attention to the new forecasts, as well as the press conference with Carney and his colleagues. If the BoE is considering a hike in May, you would expect it to start laying the groundwork for it today and at the meeting in March, which could provide additional upside pressure in UK debt and sterling, which is already trading at pre-referendum levels against the dollar.

Market Jitters Remain

Crypto Rebound May Be Short-Lived

The rebound in bitcoin is continuing today, with the cryptocurrency now up more than 40% from the lows posted two days ago. In any other asset other than cryptocurrencies, this kind of move would be staggering but instead this is just another day for bitcoin. It is also only a small rebound compared to the declines it’s seen over the last couple of months and may prove to be yet another dead cat bounce, albeit one that exceeds 40%.

Bitcoin Daily Chart

Source – Thomson Reuters Eikon

I’m not convinced yet that any rebound will be sustained as we continue to see a steady stream of negative news flow which has severely damaged sentiment in cryptocurrencies. The rally towards the end of last year was driven by the buzz and positive sentiment towards bitcoin and its peers – as well as a large speculative push from FOMO traders – and the reversal of this has equally weighed heavily on it. If that continues, I see no reason why it won’t be back below $6,000 in the not too distant future.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

Are BoE Interest Rate Expectations Too Bullish?

BoE to Release New Economic Forecasts Alongside Rate Decision

The Bank of England holds its first monetary policy meeting of the year this week, after which it will release the quarterly inflation report alongside its monetary policy decision and hold a press conference with Governor Mark Carney.

The event – which is often referred to as “Super Thursday” – is one of the most hotly anticipated of the UK calendar as it offers significant insight into the thoughts of the Monetary Policy Committee, something that’s become increasingly sought after since it started raising interest rates in November.

BoE policy makers took the decision to raise interest rates after inflation surpassed 3% in November, a level deemed by many to be too high despite being driven by one-off currency moves in the aftermath of Brexit. This is led many economists to forecast another hike this year and two more over the three forecasting period, but have they and others been misled by the central bank?

GBP/USD – Pound Under Pressure, BoE Rate Decision Next

In many ways, the dilemma facing the BoE is no different than that facing other central banks – the economy is growing, unemployment is very low, labour market slack appears low and yet inflation is stubbornly low – but one very important difference exists, Brexit.

The sheer amount of uncertainty that exists because of Brexit has resulted in low growth compared to its peers and its pre-referendum levels, businesses are reluctant to invest and the consumer squeeze is taking its toll. The economy may well have shown more resilience than many feared prior to the referendum but is this really the kind of environment that the central bank should be raising rates in? If not, why did they raise by 25 basis points in November?

The central bank will naturally point to the above target inflation as warranting a hike which would be fair, assuming they believed it would remain at those levels of exceed it, which is debatable. This would also indicate a willingness to raise more if inflation remains well above target. While it’s likely to have peaked, it’s not expected to fall very far for a while which is why people may be anticipating further hikes.

Another possibility could be that they wanted to reverse the emergency post-Brexit rate cut which many Brexiteers criticized at the time and some others have questioned the need for since. Especially when you consider that the central bank was reluctant to move below 0.5% throughout the aftermath of the global financial crisis and eurozone debt crisis. If lower rates were seen as risky or unnecessary then, can they possibly be warranted now? If not and this was behind November’s decision, are the markets wrong in anticipating another hike this year and more after?

Gold Slides to 4-Week Low as Stock Markets Settles Down

This could become a lot clearer in the coming meetings and Thursday should offer some early insight, particularly as the inflation report includes growth and inflation forecasts. Any indication that policy makers are in no rush to raise again could see markets pare back expectations resulting in lower yields on UK debt which could in turn weigh on the pound. We may not get this on Thursday though, assuming we do at all, as they may opt to gradually soften their stance over a number of meetings, particularly if Brexit negotiations aren’t progressing as planned. Ultimately, these will have a major bearing on how interest rates move over the three year forecast period.

GBPUSD Daily Chart

OANDA fxTrade Advanced Charting Platform

The FTSE 100 may also be sensitive to the BoE event on Thursday, given its inverse relationship with the pound. A stronger pound has typically weighed on the index due to the external exposure of the companies that make up the index, while a weaker pound has been positive for it, as seen in the aftermath of the referendum. It’s been a rough couple of weeks for the FTSE, the last couple of days in particular as volatility has returned in force and equities have been sent into a tailspin lower. A strengthening pound – should the BoE release bullish forecasts and adopt a hawkish tone – may not help matters.

FTSE and GBP Trade Weighted Index Correlation

Source – Thomson Reuters Eikon

GBP/USD – Pound Under Pressure, BoE Rate Decision Next

The British pound is lower on Wednesday, as the currency has been under pressure for most of the week. In the North American session, GBP/USD is trading at 1.3883, down 0.48% on the day. On the release front, British Halifax HPI declined 0.6%, below the estimate of +0.2%. This marked the first decline since June. There are no US releases on the schedule. On Thursday, the US releases unemployment claims.

It’s been a rough week for the pound, which started the week with losses and has shed 1.6%. The US dollar has posted gains against the pound and the other majors, after a massive sell-off on global stock markets on Monday. The sell-off was precipitated by strong US nonfarm payrolls and wage growth reports on Friday. This triggered concerns that higher inflation was on the way, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of other currencies. Although global stock markets have settled down, concerns remain that inflation could move higher after years of being AWOL across industrialized countries, and could again spook the markets.

The spotlight will be on the Bank of England on Thursday, as the bank sets the benchmark rate and releases the Inflation Report. The markets will be also be keeping a close eye on the Inflation Letter, which Governor Mark Carney is required to write due to inflation being more than 1% off the target of 2.0% (CPI is currently running at a 3.1% clip). Carney will address what the Bank is doing to lower inflation, and higher interest rates is one remedy, but one that Carney will hope to avoid, given the economic uncertainty surrounding Brexit. The BoE is expected to hold current rates at 0.50%, and all nine members of the Monetary Policy Committee are expected to support this move. If some members vote in favor of a rate hike, the pound could respond with gains.

GBP/USD Fundamentals

Wednesday (February 7)

  • 3:30 British Halifax HPI. Estimate +0.2%. Actual -0.6%
  • 8:30 US FOMC Member William Dudley Speaks
  • 10:30 US Crude Oil Inventories. Estimate 3.2M. Actual 1.9M
  • 13:01 US 10-year Bond Auction
  • 15:00 US Consumer Credit. Estimate 19.9B
  • 17:20 US FOMC Member John Williams Speaks
  • 19:01 British RICS House Balance. Estimate 5%

Thursday (February 8)

  • 7:00 BoE Inflation Report
  • 7:00 MPC Official Bank Rate Votes. Estimate 0-0-9
  • 7:00 BoE Monetary Policy Summary
  • 7:00 BoE Official Bank Rate. Estimate 0.50%
  • 7:00 BoE Inflation Letter
  • 7:00 MPC Asset Purchase Facility Votes. Estimate 0-0-9
  • 7:00 British Asset Purchase Facility
  • 8:30 US Unemployment Claims. Estimate 236K

*All release times are GMT

*Key events are in bold

GBP/USD for Wednesday, February 7, 2018

GBP/USD February 7 at 11:20 EDT

Open: 1.3950 High: 1.3994 Low: 1.3873 Close: 1.3883

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3613 1.3744 1.3809 1.3901 1.4010 1.4128

GBP/USD showed little movement in the Asian session. The pair posted considerable losses in European trade. In North American trade, the pair posted gains but has reversed directions and lost ground

  • 1.3809 is providing support
  • 1.3901 has switched to a resistance role after GBP/USD posted losses on Wednesday. It is a weak line

Current range: 1.3809 to 1.3901

Further levels in both directions:

  • Below: 1.3809, 1.3744, 1.3613
  • Above: 1.3901, 1.4010, 1.4128 and 1.4271

OANDA’s Open Positions Ratio

GBP/USD ratio is showing little movement in the Wednesday session. Currently, short positions have a majority (60%), indicative of trader bias towards GBP/USD continuing to head lower.

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.

Weekly FX Market Update – 6 February 2018 (Video)

It’s been an extremely turbulent 24 hours in the financial market with the Dow recording its largest ever daily points drop as panic set in and traders tried to work out what was triggering such a strong sell-off. Markets have stabilized a little on Tuesday but there remains some concern among traders which continues to weigh.

Senior Market Analyst Craig Erlam talks about what he thinks has triggered such a move and goes through this week’s other key events in the markets.

He also gives his live analysis on EURUSD (18:08), GBPUSD (20:02), EURGBP (22:12), AUDUSD (23:32), USDCAD (25:10), GBPCAD (27:16), NZDUSD (28:54), USDJPY (30:58), GBPJPY (32:53) and EURJPY (34:12).

DAX Recovers After Falling to 5-Month Low

Beware: FX Space is Calm, But Appearances Can Be Deceiving

Plop Plop Fizz Fizz Oh What a Relief it is

GBP/USD – Pound Drops to 2-Week Low After Global Sell-off Boosts Dollar

The British pound remains under pressure this week. In Tuesday’s North American session, GBP/USD is trading at 1.3951, down 0.15% on the day. On the release front, there are no British events on the schedule. The US trade deficit widened, climbing to $53.1 billion and missing the forecast of $52.1 billion. In the US, JOLTS Jobs Openings slowed to 5.81 million, well off the estimate of 5.95 million.

PMI indicators are important gauges of the British economy, and the January reports have all disappointed. Last week, Manufacturing and Construction PMIs slowed in January and missed their estimates. Construction PMI dropped to 50.2, pointing to stagnation in the construction sector. On Monday Services PMI continued to the trend, as the pace of expansion slowed in January. These weaker numbers across the economy are sure to trigger concerns that Brexit is taking its toll on the economy, and the pound briefly dropped below the symbolic 1.40 level earlier in the day.

It’s been a rough week for the pound, which started the week with losses. The US dollar has posted broad gains this week, after a massive sell-off on global stock markets. The sell-off can be attributed to strong US nonfarm payrolls and wage growth reports, which were released on Friday. Investors fear that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets. Adding to investors’ concerns, there are expectations that the ECB and possibly the Bank of Japan could raise rates late in 2018, which would push up the euro and yen and weigh on the stock markets.

The Janet Yellen era is over at the Federal Reserve. On the weekend, Jerome Powell took over as chair, replacing Yellen. On Friday, Yellen waxed optimistic about the economy, saying that strong growth, a red-hot labor market and increased wage growth would require the Fed to gradually raise interest rates. Powell is expected to continue to Yellen’s policies, so the markets are not expecting any dramatic shifts. However, the massive US tax cut will have a strong impact on the US economy, and the markets will be looking to the Fed for guidance. If the Fed sounds optimistic about the tax reform package, the US dollar could move higher.

 

GBP/USD Fundamentals

Tuesday (February 6)

  • 8:30 US Trade Balance. Estimate -52.1B. Actual -53.1B
  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M
  • Tentative – US IBD/TIPP Economic Optimism. Estimate 55.4

*All release times are GMT

*Key events are in bold

 

GBP/USD for Tuesday, February 6, 2018

GBP/USD February 6 at 11:50 EDT

Open: 1.3962 High: 1.4000 Low: 1.3836 Close: 1.3951

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3744 1.3809 1.3901 1.4010 1.4128 1.4271

GBP/USD inched higher in the Asian session. The pair posted considerable losses in European trade but has recovered in the North American session

  • 1.3901 is providing support
  • 1.4010 is the next line of resistance

Current range: 1.3901 to 1.4010

Further levels in both directions:

  • Below: 1.3901, 1.3809 and 1.3744
  • Above: 1.4010, 1.4128, 1.4271 and 1.4346

OANDA’s Open Positions Ratio

GBP/USD ratio is showing gains in short positions. Currently, short positions have a majority (62%), indicative of trader bias towards GBP/USD continuing to head lower.

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.

GBP/USD – Pound Drops as UK Services PMI Disappoints

The British pound has posted considerable losses in the Monday session. In North American trade, GBP/USD is trading at 1.4009, down 0.79% on the day. On the release front, the focus was on the services sectors. British Services PMI slowed to 53.0, missing the estimate of 53.0 points. Later in the day, the UK releases British BRC Retail Sales Monitor. In the US, Non-Manufacturing PMI climbed to 59.9, above the forecast of 56.5 points. This points to strong expansion in the services sector and marked a 3-month high. On Tuesday, the US releases JOLTS Job Openings.

PMI indicators are important gauges of the British economy, and the January reports have all disappointed. Last week, Manufacturing and Construction PMIs slowed in January and missed their estimates. Construction PMI dropped to 50.2, pointing to stagnation in the construction sector. On Monday Services PMI continued to the trend, as the pace of expansion slowed in January. These weaker numbers across the economy are sure to trigger concerns that Brexit is taking its toll on the economy, and the pound briefly dropped below the symbolic 1.40 level earlier in the day.

On Friday, US employment numbers were strong, propelling the dollar to broad gains against major currencies, including the British pound, which dropped 1.1%. Nonfarm payrolls jumped to 200 thousand, beating the estimate of 181 thousand. Wage growth remained steady at 0.3%, edging above the estimate of 0.2%. Will the strong numbers lead to additional interest rate hikes? Minneapolis Fed President Neel Kaskkari said on Friday that the Fed might need to be more aggressive if wages continued to move higher. The Fed is planning to raise rates three times in 2018, but some economists are forecasting four hikes.

GBP/USD Fundamentals

Monday (February 5)

  • 4:30 British Services PMI. Estimate 54.1. Actual 53.0
  • 9:45 US Final Non-Manufacturing PMI. Estimate 53.3. Actual 53.3
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.5. Actual 59.9
  • Tentative – US Loan Officer Survey
  • 19:01 British BRC Retail Sales Monitor

Tuesday (February 6)

  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M

*All release times are GMT

*Key events are in bold

GBP/USD for Monday, February 5, 2018

GBP/USD February 5 at 11:50 EDT

Open: 1.4100 High: 1.4151 Low: 1.3987 Close: 1.4004

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3809 1.3901 1.4010 1.4128 1.4271 1.4346

GBP/USD showed little movement in the Asian session. The pair posted considerable losses in European trade and the downward trend continues in the North American session

  • 1.4128 is providing support
  • 1.4271 is the next line of resistance

Current range: 1.4128 to 1.4271

Further levels in both directions:

  • Below: 1.4010, 1.3901, 1.3809 and 1.3744
  • Above: 1.4128, 1.4271 and 1.4346

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is showing short positions with a majority (56%). This is indicative of trader bias towards GBP/USD reversing directions and moving 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.

Dollar Struggles Despite Fed Optimism

Eurozone Manufacturers Still Extremely Bullish Despite Stronger Euro

It’s been a positive start to trading on the first day of the month, with markets in Europe trading well in the green and US futures ticking a little higher as well.

It’s been a busy morning of economic releases and broadly speaking, the data is very positive for the eurozone economy. The region carried some strong momentum into the new year and the latest manufacturing PMIs suggest confidence in the recovery is showing no signs of faltering. The survey for the region as a whole remained at 59.6, slightly shy of last month’s high of 60.1 while still signalling a strong growth outlook for the sector.

The weak euro has played a big role in the strong performance of the sector which has led many to speculate about whether its resurgence over the last year will hinder output going forward. The survey’s we’re seeing suggest manufacturers are not particularly concerned at this stage and are continuing to see strong demand, despite the 20% increase in the value of the euro over the dollar over the last year. The rise against the pound has been far more modest though.

OANDA fxTrade Advanced Charting Platform

UK PMI Slips But Sterling Continues Push Higher

The UK data has been less encouraging as of late and the manufacturing PMI for January was no different, slipping to 55.3 from 56.2 in December. The sector has actually benefited in the post-Brexit world, with the sterling depreciation driving more demand for UK manufactured goods. Unfortunately, it still remains a very small part of the UK economy and the boost seems to be wearing off.

That said, a weaker PMI number this morning did little to shake the pound which is heading back to last week’s highs against the dollar. Cable now finds itself back it pre-Brexit territory, although much of this can be attributed to the greenbacks decline over the last year. The pair found some resistance around 1.4350 but there’s clearly still some bullish appetite there. A break through here could see the pair testing 1.45, which isn’t a million miles from the 2016 highs.

US Data Eyed as Optimistic Fed Fails to Lift the Greenback

The dollar is continuing to have a rough time, even a more optimistic sounding Fed did little to lift the greenback which continues to languish around three year lows. Yields on near-term US debt have risen in the aftermath of the Fed statement, with a rate hike in March now almost entirely priced in and a further two this year around 65% priced in. This would typically be positive for the dollar any gains were short-lived.

There’s plenty more data still to come today, with two manufacturing PMIs from the US as well as unit labour costs, non-farm productivity and jobless claims. Earnings season remains a key focus for investors and some big names are due to report after the close on Thursday, including Amazon, Apple and Alphabet.

Bitcoin Below $10,000 and Looking Vulnerable

Bitcoin is coming under pressure once again today and is trading back below $10,000, a level that has proven difficult to hold below. It’s currently trading down more than 5% on the day though and should we close below here, it could be yet another bearish signal for the cryptocurrency which is already more than 50% below its peak.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.