GBP/USD – Pound Subdued as US Jobless Claims Slides

It’s been a  quiet day for GBP/USD in the Thursday session. In North American trade, the pair is trading at 1.2230. On the release front, British Nationwide HPI gained 0.8%, easily beating the estimate of 0.2%. In the US, unemployment claims dropped to 265 thousand, well below the forecast of 277 thousand.

There were plenty of jitters in the markets after the June Brexit vote, with gloom-and-doom forecasts for the British economy. However, the UK has Brexit quite well, posting decent numbers in the third and fourth quarters. The British pound has taken a tumble, however, losing about 18 percent since the historic June vote. With Britain and the European Union set to discuss the details of the departure early next year, the markets will be nervously waiting for the negotiations to begin. The discussions are likely to be difficult, with the EU determined to show Britain and other members that leaving the club doesn’t pay. Given the ill will between the sides, negotiations could easily grind to a standstill. Such a scenario would leave Britain in limbo, weakening the economy and sending the wobbly pound down even further.

With the US economy continuing to expand sharply, US consumers are brimming with confidence, in what analysts are describing as a post-election surge in optimism. Recent consumer confidence surveys are pointing upwards, as the US consumer is optimistic that economic conditions will continue to improve under the incoming Trump administration. The CB Consumer Confidence report surged in December to 113.7, its highest level since August 2001. This reading comes on the heels of UoM Consumer Sentiment, which climbed to a 12-year high, with a reading of 93.8 points. Both of these well-respected surveys found that consumers are confident that continuing economic growth will create new jobs and raise incomes. Trump’s economic platform remains short on details, but he has promised to cut taxes while increasing public spending. If Trump manages to implement both of these goals, the US economy could heat up and also help global growth pick up speed.

GBP/USD Fundamentals

Thursday (December 29)

• 2:00 British Nationwide HPI. Estimate 0.2%. Actual 0.8%
• 8:30 US Unemployment Claims. Estimate 277K. Actual 265K
• 8:30 US Goods Trade Balance. Estimate -61.5B. Actual -65.3B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.1%. Actual 0.9%
• 10:30 US Natural Gas Storage. Estimate -219B
• 11:00 US Crude Oil Inventories. Estimate -1.3M

*All release times are EST

* Key events are in bold

GBP/USD for Thursday, December 29, 2016

GBP/USD December 29 at 10:50 EST

Open: 1.2217 High: 1.2274 Low: 1.2217 Close: 1.2230

GBP/USD Technical

• GBP/USD posted slight gains in the Asian session. In European trade, the pair continued with slight gains but then retracted. GBP/USD has posted small losses in the North American session
• 1.2111 is providing support
• 1.2272 is the next resistance line

Further levels in both directions:

• Below: 1.2111, 1.1943 and 1.1844
• Above: 1.2272, 1.2351, 1.2471 and 1.2620
• Current range: 1.2111 to 1.2272

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in the Thursday session. Currently, long positions have a majority (58%), indicative of trader bias towards GBP/USD continuing to move 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.