GBP/USD – British slightly higher, U.S PPI declines

GBP/USD has posted slight gains on Wednesday. In the North American session, the pair is trading at 1.3065, up 0.25% on the day. In the U.S, PPI and Core PPI both came in at -0.1%, missing their estimates. There are no major British events. On Thursday, the Bank of England sets its benchmark interest rate, which is expected to remain at 0.75%. The U.S will release CPI reports as well as unemployment claims.

All eyes are on the Bank of England, which is expected to stay on the sidelines, after raising rates a quarter-point in August. The markets will be paying close attention to the Bank’s rate statement, as well as the vote by policymakers, which is expected to be unanimous. The BoE may maintain rates until after the UK leaves the EU in March, in order to minimize the expected disruption that the Brexit will have on the British economy. A lack of rate hikes will make it tougher for the pound to gain, unless the UK economy shows stronger growth than expected.

The U.S-China trade war has been on pause, but could heat up again at any time. The ball is currently in the corner of President Trump, who has threatened to impose tariffs on $200 billion worth of Chinese tariffs. The time period for public consultations ended last week, which means that Trump is free to announce another round of tariffs at any time. Despite fears that the trade war could trigger a recession, trade between the U.S and China actually increased in August. The dollar has benefited from the global trade war, and further tariffs against China could unnerve investors and propel the greenback upwards.

GBP/USD Fundamentals

Wednesday (September 12)

• 8:30 US PPI. Estimate 0.3%. Actual -0.1%
• 8:30 US Core PPI. Estimate 0.2%. Actual -0.1%
• 10:30 US Crude Oil Inventories. Estimate -1.3M
• 12:45 US FOMC Member Lael Brainard
• 13:01 US 10-year Bond Auction
• 14:00 US Beige Book

Thursday (September 13)

• 8:30 US CPI. Estimate 0.3%
• 8:30 US Core CPI. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 210K
• 10:00 US FOMC Member Randal Quarles Speaks
• 10:30 US Natural Gas Storage. Estimate 65B
• 13:01 30-year Bond Auction
• 13:15 US FOMC Member Raphael Bostic Speaks
• 14:00 US Federal Budget Balance. Estimate -169.8B

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, September 12, 2018

GBP/USD September 12 at 13:10 DST

Open: 1.3032 High: 1.3081 Low: 1.2981 Close: 1.3065

GBP/USD Technical

GBP/USD was flat in the Asian session. In European trade, the pair edged lower but then recovered. GBP/USD has posted gains higher in the North American session

• 1.2966 is providing support
• 1.3088 is the next resistance line
• Current range: 1.2966 to 1.3088

Further levels in both directions:

• Below: 1.2966, 1.2852, 1.2706 and 1.2589
• Above: 1.3088, 1.3173 and 1.3301

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