GBP/USD – British Pound Looking for Footing

The British pound moved higher on Monday, but has given up these gains. In North American trade, GBP/USD is trading at 1.3332, up 0.02% on the day. On the release front, there are no UK events on the schedule. In the US, New Home Sales surged to 687 thousand, well above the estimate of 627 thousand. On Tuesday, the focus will be on the Bank of England which publishes the results of its bank stress tests, as well as the semi-annual Financial Stability report. The US releases CB Consumer Confidence, with an estimate of 123.9 points. As well, Federal Reserve Chair Designate Jerome Powell will testify before a Congressional committee.

There may be signs that the British economy is slowing down, but CBI retail sales and manufacturing reports looked sharp last week. Retail sales jumped in November, as CBI Realized Sales rebounded with a strong reading of 26 points. The release was all the more impressive, as the indicator came in at -36 points in October. CBI Industrial Order Expectations, an important barometer of activity in the manufacturing sector, also impressed. The indicator surged to 17 points in October, rebounding from the September release of -2 points. Manufacturing indicators continue to point upwards, boosted by strong global demand and a weak British pound. Export order books are at their highest levels since 1995, and the markets are predicting that the export and manufacturing sectors will continue to shine in the fourth quarter.

All eyes will be on Jerome Powell, who testifies before the Senate Banking Committee on Tuesday for his confirmation hearing. Will Powell be a clone of outgoing chair Janet Yellen? Powell inherits an economy that is in excellent shape, but persistently low inflation remains a nagging problem. Fed policymakers have differing views on what to do about inflation, with some members proposing that the Fed drop its 2 percent target, in favor of a “gradually rising path” for prices. The Fed remains confounded by low inflation and wage growth, despite a labor market that is at full capacity. Still, the Fed will likely pull the rate trigger next month, and could raise rates up to 3 more times in 2018 if the economy continues to expand at its current pace.

GBP/USD Fundamentals

Monday (November 27)

• 9:30 BoE Chief Economist Andy Haldane Speaks
• 10:00 US New Home Sales. Estimate 627K. Actual 685K
• 17:30 US FOMC Member Neel Kashkari Speaks
• 19:00 US FOMC Member William Dudley Speaks

Tuesday (November 28)

• 2:00 British Bank Stress Test Results
• 2:00 BoE Financial Stability Report
• 2:00 British FPC Statement
• 28th-4th British Nationwide HPI. Estimate 0.2%
• 2:30 BoE Governor Mark Carney Speaks
• 10:00 US CB Consumer Confidence. Estimate 123.9
• 10:00 Fed Chair Designate Jerome Powell Speaks
• 15:45 US Treasury Secretary Steven Mnuchin Speaks

*All release times are GMT

*Key events are in bold

GBP/USD for Monday, November 27, 2017

GBP/USD November 27 at 12:05 EDT

Open: 1.3338 High: 1.3383 Low: 1.3310 Close: 1.3332

GBP/USD Technical

GBP/USD was flat in the Asian session. The pair posted considerable gains in European trade but has retracted in North American trade

• 1.3321 is a weak support level
• 1.3402 is the next resistance line

Further levels in both directions:

• Below: 1.3321, 1.3186, 1.3048 and 1.2930
• Above: 1.3402, 1.3503 and 1.3655
• Current range: 1.3321 to 1.3402

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is close to an even split between long and short positions, indicative of a lack of trader bias as to what direction GBP/USD will take next.

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.