GBP/USD – British pound edges higher, investors eye UK job numbers

The British pound has recorded slight gains in the Monday session. In North American trade, the pair is trading at 1.3266, up 0.24% on the day. On the release front, British Rightmove HPI surprised with a decline of -0.1%, its first decline since December. In the U.S, core retail sales dropped to 0.4%, matching the estimate. Retail sales dropped to 0.5%, edging above 0.4%. On Tuesday, BoE Governor speaks before the Treasury Select Committee, and the U.K will release wage growth and unemployment rolls. In the U.S, Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee.

The U.S economy is firing on all cylinders and received a vote of confidence from the head of the Federal Reserve. On Thursday, Powell said that the economy is “in a really good place”, pointing to President Trump’s massive tax cut scheme and increased spending as key factors in boosting economic growth. Powell did not address monetary policy and said he was uncertain as to the effects of the current trade disputes which has embroiled the U.S and its trading partners. The Fed will likely press the rate trigger in the second half of the year, but it is an open question as to whether we’ll see one hike over the next six months. The Fed is projecting growth of 2.8% in 2018, compared to 2.3% in 2017. Powell will be in the spotlight next week when he appears for his semi-annual testimony before Congress.

Trade policy is not part of the Federal Reserve’s mandate, but Fed policymakers continue to voice concern about the escalating trade war between the U.S and its major trading partners, particularly China. On Friday, Dallas Fed President Robert Kaplan said he would have to downgrade his outlook if the tariff battle continues. Kaplan said that U.S tariffs on steel and aluminum imports had dampened capital expenditures plans and further trade tensions could lead to currency fluctuations and geopolitical instability.

As the Brexit deadline creeps ever closer, both sides are making contingency plans for a ‘hard Brexit’, in the event that the parties fail to reach an agreement. On Thursday, the British government released a white paper, which is a blueprint for trade arrangements with the EU when Britain leaves the club in March 2019. The proposal suggests that the UK and the EU will enter into an “association agreement”, which maintains current agreements with regards to goods but not services. This could have a significant negative impact on London’s financial hub, which is already facing the loss of hundreds of financial jobs from London to the continent. Prime Minister May is facing strong opposition from hardliners in her cabinet, who argue that the white paper leaves the EU too much control over British trade policy and could hamper British trade deals. Will the Europeans buy what May is selling? EU policymakers are reviewing the white paper and if it is rejected, investors could get panicky and send the pound lower.

  Trade ,earnings ,teapots and the US dollar

China Q2 GDP growth as expected, though lower than Q1

 

GBP/USD Fundamentals

Sunday (July 15)

  • 19:01 British Rightmove HPI. Actual -0.1%

Monday (July 16)

  • 8:30 US Core Retail Sales. Estimate 0.4%. Actual 0.4%
  • 8:30 US Retail Sales. Estimate 0.4%. Actual 0.4%. Actual 0.5%
  • 8:30 US Empire State Manufacturing Index. Estimate 20.3. Actual 22.6
  • 10:00 US Business Inventories. Estimate 0.4%

Tuesday (July 17)

  • 4:00 BoE Governor Mark Carney Speaks
  • 4:30 British Average Earnings Index. Estimate 2.5%
  • 4:30 British Claimant Count Change. Estimate 2.3K
  • 4:30 British Unemployment Rate. Estimate 4.2%
  • Tentative – British NIESR GDP Estimate
  • 9:15 US Capacity Utilization Rate. Estimate 78.4%
  • 9:15 US Industrial Production. Estimate 0.5%
  • 10:00 US Federal Reserve Jerome Powell Testifies
  • 10:00 US NAHB Housing Market Index. Estimate 69
  • 16:00 US TIC Long-Term Purchases. Estimate 34.3B

*All release times are DST

*Key events are in bold

 

GBP/USD for Monday, July 16, 2018

GBP/USD July 13 at 10:25 DST

Open: 1.3235 High: 1.3293 Low: 1.3224 Close: 1.3266

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3088 1.3186 1.3263 1.3494 1.3613 1.3712

GBP/USD posted small gains in the Asian and European sessions. The pair is showing little movement in North American trade

  • 1.3263 has switched to a support level after gains by GBP/USD on Monday. It is a weak line
  • 1.3494 is the next of resistance
  • Current range: 1.3263 to 1.3494

Further levels in both directions:

  • Below: 1.3263, 1.3186, 1.3088 and 1.2996
  • Above: 1.3494, 1.3613 and 1.3712

Trade War and Trump European Trip Boost US Dollar

The US dollar was higher across the board against major pairs on Friday. Trade war concerns rose heading into the weekend and the comments from US President Donald Trump during the week sparked a rally of USD buying. Trump has been outspoken on NATO, trade and the Brexit deal while economic indicators and the US Fed have been supportive of the greenback. The Trump administration has said that it would add 10 percent tariffs on additional $200 billion Chinese goods if the Asian nation retaliates. U.S. Federal Reserve Chair Jerome Powell highlights the week with his semi annual testimonies.

  • US retail sales expected to slow down
  • Fed Chair Powell to testify before congress and senate committees
  • Canadian inflation and retail sales data out on Friday

**Dollar Firmer on Trade Tensions and Fed Comments **

The EUR/USD fell 0.80 in the last five sessions. The single currency is trading at 1.1648 after the EUR lost ground int he first four days of the week, only to mount a half hearted recovery on Friday. The pair started the week trading at 1.1763 and will close at 1.1685. Hawkish Fed member rhetoric and strong inflation indicators in the US did their part on the fundamental side, but with geopolitics playing such an important part the focus of investors was on the ongoing trade war with China. The USD became a safe haven and attracted flows looking to hedge against uncertainty.



The U.S. Federal Reserve has lifted interest rates twice already in 2018 and Fed members have been out in numbers endorsing one or two more additional hikes. The tone of the testimonies from Chair Powell to the congress and senate committees will guide the currency.

European inflation data will be released on Wednesday and is expected to remain steady at 2.0 percent. US retail sales data is expected to drop to a small gain of 0.4 percent but the emphasis will be on Fed Chair Powell’s testimony alongside other member comments during the week. The G20 financial summit will be held in Buenos Aires starting on Friday, July 20 which will be interning as trade spats have escalated to tariff wars but have yet to fully impact global markets.

Yen Loses Safe Haven Appeal

The USD/JPY gained 1.83 percent during the week. The currency pair is trading at 112.47 with the yen one of the biggest losers against the USD in the past five sessions. The Japanese currency shed its safe haven status as a major source of its exports has been targeted in the trade wars (auto) and the US yield curve flattening making the greenback a more attractive destination.



Bank of Canada Hike Can’t Compete with Trade Concerns

The USD/CAD gained 0.65 percent in the last five days. The currency pair is trading at 1.3174 even after the Bank of Canada (BoC) made the benchmark interest rate 25 basis points higher on Wednesday. The official rate is now 1.50 percent, closing the gap with the Fed funds rate alongside some hawkish forecasts of the economy by Governor Poloz.


Canadian dollar weekly graph July 9, 2018

The main headwind for the loonie has been the current geopolitical climate, trade in particular. The Canadian economy is heavily dependant on its relationship with the US and the Trump administration has been pushing for a deep NAFTA renegotiation in exchange to exempt Canada form other tariffs.

The loonie got little support from oil prices with West Texas Intermediate falling since the higher than expected supplies coming online. The weekly inventories posted a large drawdown, but ends of disruption in Libya and a softer stance on Iranian oil by the US is pushing crude prices down. US officials are considering dipping into the oil receiver to prevent a sharp price increase.

Brexit Pressure and Trump Comments Take Down Pound

The GBP/USD lost 0.81 percent in the last week. The currency pair is trading at 1.3178 in the aftermath of a softer Brexit plan drafted by Prime Minister Theresa May was published. The strategy has already resulted in multiple resignations from hard line Brexiteers in May’s government but so far has been short on details. The EU withdrawal bill will be voted next week and then the UK government will sit down with the EU to keep hashing out the Brexit negotiation



UK data will be released that could end up putting the Bank of England (BoE) August rate hike out of reach. Labor data, inflation and retail sales are all due during the week. The Brexit negotiation continues to be a bumpy ride and that is only on the domestic side, EU negotiators might not agree with May’s promises back home regardless of the political cost.

Sunday, July 15
10:00pm CNY GDP q/y
Monday, July 16
8:30am USD Core Retail Sales m/m
USD Retail Sales m/m
6:45pm NZD CPI q/q
9:30pm AUD Monetary Policy Meeting Minutes
Tuesday, July 17
4:30am GBP Average Earnings Index 3m/y
4:30am GBP BOE Gov Carney Speaks
10:00am USD Fed Chair Powell Testifies
Wednesday, July 18
4:30am GBP CPI y/y
8:30am USD Building Permits
10:00am USD Fed Chair Powell Testifies
10:30am USD Crude Oil Inventories
9:30pm AUD Employment Change
Thursday, July 19
4:30am GBP Retail Sales m/m
Friday, July 20
8:30am CAD CPI m/m
8:30am CAD Core Retail Sales m/m

What sparked the dollar rally ? ( OANDA Trading Podcast on Money FM 89.3)

Stephen Innes Head of Trading Asia tells Michael Switow why the yen is weak, and stocks are rallying.

Money FM Singapore 89.3

 

 

Markets higher as earnings season gets underway

Earnings season eyed as trade war fears remain

We’re seeing some risk appetite return on Friday even as concerns about trade remain front and centre and shows no signs of improving.

European equity markets are trading in the green on Friday, taking the lead from the US session on Thursday where tech stocks drove a rally that saw the NASDAQ hit a record high. With earnings season getting underway, investors will be looking for reasons to be more optimistic having spent months reading about the risks that a trade war poses to the economy.

JP Morgan, Citigroup and Wells Fargo will kick things off today and over the coming weeks, investors will be paying close attention not just to the results but also references to trade tariffs and the impact they are expected to have on future results, particularly those that have already been targeted in counter-measures taken or proposed against the US.

DAX steady as investors search for cues

Sterling slips as Trump warns of risks to US/UK trade deal

Trump has very much been in the spotlight this week, attending the NATO summit in Brussels before heading over to the UK to meet Prime Minister Theresa May. As ever, Trump was not afraid to express his views on the UK and Brexit ahead of the visit, warning that a trade deal with the US would not be possible under the model that May is seeking with the European Union, while also expressing his belief that Boris Johnson would make a good PM. This appears to have weighed on the pound in trade on Friday given the complications it could cause May and her team.

None of this will go down well with May – who has previously pushed strongly for this visit despite much protest – and comes at a terrible time for her but as Trump well knows, she is in a very weak position right now and is unlikely to fight back and, more importantly, he wants a Brexit that best suits the US. Whether Trump’s comments give more voice to dissenters among Brexiteers is yet to be seen but it certainly doesn’t help the PM as a trade deal with the US has long been touted as one of the benefits of leaving the EU.

First signs of tariffs impact in China’s June trade numbers

Chinese trade surplus increases as Trump plans more tariffs

Chinese trade data released overnight may be used as a source for Trump’s next attack on the world’s second largest economy, with exports having soared once again – rising 11.3% – increasing the surplus the country has with the US to $41.61 billion in June. While the main reason for such a spike is likely to be exporters front loading sales ahead of the tariffs being implemented, it’s likely that a stronger US economy and weaker yuan is also playing a role.

I expect this will be used as another example of the bad trade policies that Trump has repeatedly references but been unable to so far influence. Trump is attempting to force them back to the table with threats of another $200 billion in tariffs, something that has so far only been met with retaliation from China and others.

Economic Calendar

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

GBP/USD -British pound trading sideways, political drama continues

The British pound is showing limited movement in the Wednesday session. In North American trade, the pair is trading at 1.3245, down 0.22% on the day. In economic news, there are key British releases. In the U.S, inflation reports narrowly beat their estimates. Core PPI was unchanged at 0.3%, beating the forecast of 0.2%. PPI dropped from 0.5% to 0.3%, above the estimate of 0.2%. On Thursday, the UK releases the BoE Credit Conditions Survey and the U.S publishes CPI and Final CPI as well as unemployment claims.

Prime Minister Theresa May is in a precarious position, as her government is in crisis following the stunning resignation of foreign secretary Boris Johnson on Monday. This comes on the heels of the resignation of Brexit Secretary David Davis on Sunday. Both senior ministers were protesting the “Chequers Agreement” in which the cabinet backed May’s stance in which the UK would maintain current customs arrangements for manufacturing and agricultural products after Brexit. Brexit hardliners such as Davis and Johnson have argued that such an arrangement would force Britain to harmonize much of its economy based on the dictates of Brussels. There is growing speculation that May will be replaced, and if the political crisis in Whitehall worsens, the pound could face some significant headwinds.

The markets continue to cast a wary eye at the worsening global trade war, particularly between the United States and China. After the two economic giants imposed tariffs on each other of some $30 billion, the Trump administration has raised the ante, threatening to hit China with further tariffs on $200 billion worth of Chinese goods. China cannot retaliate in kind, since it does not import that amount of goods from the U.S. Still, the Chinese can take steps which will make it more difficult for U.S companies to do business in China. President Trump’s presence at the NATO summit will not bolster investor confidence, as Trump has lashed out at Germany and other NATO members for not paying their fair share in defense spending.

  Investors turn risk-averse on tariff war escalation

  ( Update 1) When the going gets tough, the tough get going

GBP/USD Fundamentals

Wednesday (July 11)

  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.3%
  • 8:30 US PPI. Estimate 0.2%. Actual 0.3%
  • 10:00 US Final Wholesale Inventories. Estimate 0.5%. Actual 0.6%
  • 10:30 US Crude Oil Inventories. Estimate -4.1M. Actual -12.6M
  • 11:35 BoE Governor Mark Carney Speaks
  • 12:30 US FOMC Member Rafael Bostic Speaks
  • 13:01 US 10-year Bond Auction
  • 16:30 US FOMC Member John Williams Speaks
  • 19:01 British RICS House Price Balance. Estimate -3%

Thursday (July 12)

  • 4:30 BoE Credit Conditions Survey
  • 8:30 US CPI. Estimate 0.2%
  • 8:30 US Core CPI. Estimate 0.2%
  • 8:30 US Unemployment Claims. Estimate 226K

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, July 11, 2018

GBP/USD July 11 at 11:10 DST

Open: 1.3274 High: 1.3286 Low: 1.3234 Close: 1.3245

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2996 1.3088 1.3186 1.3263 1.3494 1.3613

GBP/USD ticked lower in the Asian session. In European trade, the pair edged higher but then reversed directions and moved lower. In North American trade, GBP/USD posted small gains but has retracted

  • 1.3186 is providing support
  • 1.3263 has switched to a resistance role after losses by GBP/USD on Wednesday
  • Current range: 1.3186 to 1.3263

Further levels in both directions:

  • Below: 1.3186, 1.3088 and 1.2996
  • Above: 1.3263, 1.3494, 1.3613 and 1.3712

When the going gets tough, the tough get going

When the going gets tough, the tough get going

U.S. stocks are trading off their intraday highs late in the NY session weighed down by financials profit-taking ahead of the deluge of bank earnings reports on Friday, robust US economic data had temporarily overshadowed fears over global trade disputes. That was until a late NY session headline suggesting the US is reportedly preparing the release of a new $200B China tariff list according to two people familiar with the matter. But a list is a list and not an actual tariff, so lots to be ironed on this one. But regardless, it will put the  markets back on the defensive for the time being

Until that point, the market was indeed embracing the raft of outstanding US economic data, and despite the apparent downside risks from an escalating trade war the fact investors continue to plough cash into equities, that was a central dictating market theme. And given the likelihood of a strong earnings season, and at one point investors were heard yelling down Wall Street “what trade war”?? Indeed, when the going gets tough, the tough get going. That was until the latest headline when much of the tough slogging was quickly unwound in minutes as the SPX shed 100 points in the flash of an eye reminding investors we are in tricky markets, and nothing can be taken for granted.

The currency markets, however, are a different kettle of fish where the market risk is relatively light with Forex traders doing little more than rotating from what currency pair is hot from what is not. In other words, chasing the fear of missing out seems to be a common theme among G-10 trades after a considerable volume of USD long positions have been culled over the past few weeks, especially against the EUR and AUD. There is a reason why risk is so low in currency land; it’s the real fear of getting sideswiped by trade war headline risk.

Oil Markets

Oil prices continue to gain on yet more production outages with Brent briefly breaching the $ 80 per barrel high water mark as strikes by workers in Norway and Gabon added to global production outages.

Without question, supply risk continues to dominate trader psyche and after the API reported another massive draw traders are now positioning for another sizeable drop in today’s EIA weekly report.

ON the bigger picture, the markets continue to access the intermediate-term supply impact as the Nov. 4 US-imposed deadline for allies to halt Iranian imports moves nearer. All the while the Libyan disruptions continue to run on.

At the end of the day, supply concerns and more disruptions  continue to skew bullish for oil prices

Gold Markets

After a brief peak above 1265 Gold prices resumed its downward path as global stock markets trade well. However Gold prices pulled came off session lows on NATO concerns as the EU countries are worried about possible side agreement between Putin and Trump which could profoundly weaken the alliance. Also, the latest tariff headlines suggesting the US is reportedly preparing the release of a new $200B China tariff list according to two people familiar with the matter should keep a bid under the market. Gold dips remain attractive especially for investors knowing that gold should be an essential part of any diversified portfolio, especially in these highly charged political times.

Currency Markets

With this morning’s tariff headline risk, I need to remind myself that the trade war is good for the dollar, as the US has the upper hand in negotiations and whichever way this issue gets resolved it’s likely to be positive for the US current account.

GBP: Cable remains the land of the brave requiring a sharp eye and quick trigger given the plethora of Brexit headline risk. But indeed, in this muddied UK political landscape it does suggest the endgame will be the UK  never leaves the EU, and in this scenario, the Pound is ” cheap as chips”. When the UK political malaise subsides, Sterling  will be the shining star of the market

JPY: The USD did look poised to break out topside given the fading of trade rhetoric and a real risk-on environment developing. US equities have held up remarkably well as the bull market keeps marching her despite the reams of negative news thrown at the benchmarks. Long USDJPY is entirely under-owned as risk-off trades are still prevalent vs the JPY, and on a break of 111.50-75 levels, dealers will be forced into a risk on trade. But as usual, nothing ever works out as planned so we may have to re-explore this scenario later once we iron our fact from fiction over the latest US trade escalation headline.

MYR: It was an up and down day for the Ringgit which was in high demand and dare I say outperformed early on Bond related inflows as investors position for dovish pause for the BNM. The MGS curve was in firm demand particularly the attractive long end yields which are usually the domain for real money investors and pension funds. Indeed, last weeks Bond market awakening was the real deal!!

As for the BNM policy decision, we anticipate no actual shift in rates, Nor Shamsiah is a BNM veteran, and it would suggest policy continuity, but the markets will be more focused on forwarding guidance. Given the political and fiscal struggles ahead, I think it’s easy to assume this will not be a hawkish pause.

Oil prices continue to flourish and should push higher given the bullish supply skews which should go a long way in supporting the government coffers.

Bank of Canada Expected to Hike on Wednesday

The US dollar is mixed against majors on Tuesday. The JPY has lost as risk appetite is back in vogue with investors and the GBP has risen after the market digested the resignations of pro-Brexit members of Theresa May’s government. The Bank of Canada (BoC) will publish its rate statement on Wednesday, July 11 at 10:00 am EDT. The market has priced in a 96 percent chance of an interest rate hike. BoC Governor Stephen Poloz will host a press conference where he could offer further insight into the decision or hedge if market reaction is too extreme in his view.

  • Bank of Canada (BoC) expected to hike rate by 25 basis points
  • US Weekly crude inventories forecasted to drop after API drawdown of 6.8M barrels
  • Bank of England (BoE) Governor Carney to speak in Boston

Loonie Awaiting Bank of Canada Decision
The USD/CAD gained 0.05 percent on Tuesday. The currency pair is trading at 1.3114 ahead of the central bank meeting. Monthly Canadian GDP data at the end of June surprised to the upside and with a positive business outlook added to a strong jobs report the Canadian central bank will be looking to close the gap with the U.S. Federal Reserve funds rate. Fed members have signalled that more rate lifts are coming and two have already been priced in. The BoC is in no hurry to hike, but there is pressure to act later in the second half of the year if it decides to hold in July.


usdcad Canadian dollar graph, July 10, 2018

While the lift in interest rates will not be a surprise, there is more anticipation for what BoC Governor Stephen Poloz has to say. Hawkish comments from BoC Governor Stephen Poloz earlier in the month taken into consideration for the meeting, although the market is forecasts more dovish remarks given the uncertain global trade scenario. If Poloz maintains a neutral to hawkish there could be a sharp movement in the currency.

Commitment of Trades (CoT) data out of the CFTC shows large investors are bearish on the currency, which could create a short squeeze scenario all depending on what Poloz ends up communicating to the market.

The Canadian economy had a solid start to 2017, but the pace kept slowing down as the Trump administration attacks on trade were gaining steam. The uncertainty about trade made the start of 2018 a difficult one for the loonie and until recently the worst performer against the USD from major currencies.

Elections in Mexico and the upcoming midterms in the US make a NAFTA renegotiation less likely this year, which minimizes but does not take out of the equation an end of the trade deal. Fundamental indicators in Canada have improved giving the central bank some room to close the gap between the US and Canadian interest rates.

Yen on the Back Foot as Risk Appetite Returns

The USD/JPY lost 0.38 percent in the last 24 hours. The currency pair is trading at 111.27 a six month high for the USD against the JPY. The yen is a preferred safe haven during times of uncertainty, but as investors seek returns they quickly sell the Asian currency. Trade war fears have waned this week and emerging markets have been the biggest winners at the expense of the JPY.



Pound Rises as PM May Survives Leadership Challenge

The GBP/USD gained 0.18 percent on Tuesday. Cable is trading at 1.3279 on the midst of Theresa May fighting for a soft Brexit and her job. On Friday it all seemed to have worked out with little opposition for her plans of an orderly divorce with the EU that allowed the UK to have access to the single market. Hard Brexit backing members of the cabinet started resigning over the weekend. The pound started to drop as Boris Johnson resigned and concerns rose of a confidence vote against PM May. The fact that May has survived a leadership challenge and some encouraging comments out of Brussels have boosted the currency.



The Conservative party remains divided, but the Eurosceptics do not have enough fire power to topple May so for now a soft Brexit is the only viable strategy. May has the support from Michael Gove, but if that were to change it could mean her ouster, with Gove a likely replacement.

Market events to watch this week:

Wednesday, July 11
10:00am CAD BOC Monetary Policy Report
10:00am CAD BOC Rate Statement
10:00am CAD Overnight Rate
10:30am USD Crude Oil Inventories
11:15am CAD BOC Press Conference
11:35am GBP BOE Gov Carney Speaks
Thursday, July 12
7:30am EUR ECB Monetary Policy Meeting Accounts
8:30am USD CPI m/m
8:30am USD Core CPI m/m

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

Bank of Canada Rate Hike OANDA Market Beat Podcast

OANDA Senior Market Analyst Alfonso Esparza reviews the major upcoming market news, macro analysis and economic indicator releases that will impact currencies, stocks other asset classes.

Subscription available on iTunes https://goo.gl/TZEWRW and GooglePlay https://goo.gl/cRBk39. Tune in every Tuesday and don’t miss a beat as we cover the hottest trends impacting the markets in the week ahead. Trading is high risk. Losses can exceed investment.

Trade Uncertainty Hits Dollar Confidence

The US dollar fell against major pairs on Friday despite a strong June NFP report.

The impending start of tariffs against Chinese goods and the retaliation from the Asian nation on US exports put downward pressure on the dollar.

The US economy added 213,000 jobs and wages rose 0.2 percent but it is the threat of trade war escalation that put pressure on the US currency.

The Canadian dollar advanced against its southern neighbour ahead of the Bank of Canada (BoC) rate statement on Wednesday. The BoC could hike rates to keep up with American interest rates.

The weekend brought a major showdown in England as Theresa May presented a soft Brexit strategy to her party that prompted some of the more hardline Brexiteers to quit, jeopardizing May’s position as leader of the party.

– UK Manufacturing expected to bounce back
– Bank of Canada (BoC) to hike interest rate to 1.50%
– US inflation to keep rising at 0.2% m/m

Live FX Market Analysis – 10 July 2018 (Video)

In this week’s webinar, Senior Market Analyst Craig Erlam discussed the latest Brexit developments as two members of her team resign after an apparently united and productive meeting on Friday. He also talks Trump, after the latest imposition of trade tariffs and ahead of his trip to the UK and the NATO summit, and previews the week ahead.

Craig also gives his live analysis on EURUSD (12:20), GBPUSD (15:03), EURGBP (17:50), AUDUSD (19:35), USDCAD (24:12), GBPCAD (26:19), NZDUSD (28:31), USDJPY (30:22), GBPJPY (32:25) and EURJPY (34:52).

GBP/USD – British pound steady on modest GDP growth

USD/JPY – Japanese yen dips to 7-week low, inflation reports next

Commodities Weekly: Gold saved by dollar’s retracement

GBP/USD – British pound steady on modest GDP growth

The British pound has posted slight losses in the Tuesday session. In North American trade, the pair is trading at 1.3268, up 0.07% on the day. On the release front, British Manufacturing Production posted a gain of 0.4%, short of the estimate of 1.0%. Still, the gain was welcome news after three consecutive declines. Britain’s trade deficit narrowed to GBP 12.4 billion, but this was larger than the estimate of GBP 11.9 billion. The UK released GDP for the months of March-May, which showed a modest gain of 0.3%. In the U.S, JOLTS Jobs Openings fell to 6.64 million, well below the estimate of 6.88 million. On Wednesday, U.S Core CPI and CPI are both expected to drop by 0.2%.

Are Theresa May’s days as prime minister numbered? Her position is precarious, as her government is in disarray following the stunning resignation of foreign secretary Boris Johnson on Monday. On Sunday, Brexit Secretary David Davis handed in his resignation, saying that the “Chequers Agreement” which the cabinet backed on Friday gave away too much to the European Union. Under that agreement, Prime Minister May presented a ‘soft Brexit’ stance, with the UK agreeing to maintain current customs arrangement for manufacturing and agricultural products after Brexit. However, Brexit hardliners such as Davis and Johnson are against the agreement, which they argue would force Britain to harmonize much of its economy based on the dictates of Brussels. The pound has managed to weather this latest storm, but the currency could face some headwinds if this crisis worsens.

U.S employment data was a mix on Friday, as job growth remained above the 200-thousand level, but wage growth faltered. Nonfarm payrolls dropped to 213 thousand, but this beat the estimate of 195 thousand. Average Hourly Earnings edged lower to 0.2%, shy of the estimate of 0.3%. There was a surprise as the unemployment rate climbed to 4.0%, above the forecast of 3.8%. The data demonstrates that the U.S labor market remains strong, and the economy continues to perform well. The markets remain bullish on U.S growth, despite uncertainty in Europe and elsewhere, as well as the growing threat of an all-out trade war between the U.S and China.

 

GBP/USD Fundamentals

Tuesday (July 10)

  • 4:30 British Manufacturing Production. Estimate 1.0%. Actual 0.4%
  • 4:30 British Goods Trade Balance. Estimate -11.9B. Actual -12.4B
  • 10:00 US JOLTS Job Openings. Estimate 6.88M. Actual 6.64M

Wednesday (July 11)

  • 8:30 US Core PPI. Estimate 0.2%
  • 8:30 US PPI. Estimate 0.2%
  • 10:00 US Final Wholesale Inventories. Estimate 0.5%
  • 10:30 US Crude Oil Inventories
  • 12:30 US FOMC Member Rafael Bostic Speaks
  • 13:01 US 10-year Bond Auction
  • 16:30 US FOMC Member John Williams Speaks

*All release times are DST

*Key events are in bold

GBP/USD for Tuesday, July 10, 2018

GBP/USD July 10 at 11:40 DST

Open: 1.3259 High: 1.3302 Low: 1.3223 Close: 1.3268

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3088 1.3186 1.3263 1.3494 1.3613 1.3613

GBP/USD posted small losses in the Asian session. The pair edged higher in European trade and has ticked higher in the North American session

  • 1.3263 is a weak support level. It could be tested in the North American session
  • 1.3494 is a resistance line
  • Current range: 1.3186 to 1.3263

Further levels in both directions:

  • Below:  1.3263, 1.3186, 1.3088 and 1.2996
  • Above: 1.3494, 1.3613 and 1.3712