GBP/USD – British Pound Unchanged on Solid UK, US Data

GBP/USD is unchanged in the Wednesday session. In the North American session, the pair is trading at 1.2450. It’s a very busy day, with a host of releases in both the UK and the US. The news was positive in both countries, leaving the pound steady. British unemployment rolls plunged by 42.4 thousand, much better than the forecast of a gain of 1.1 thousand. Wage growth gained 2.6%, short of the forecast of 2.8%. In the US, CPI gained 0.6% and Core CPI rose 0.3%, as both indicators beat their estimates. Retail sales reports also beat expectations, with Core Retail Sales climbing 0.8% and Retail Sales gaining 0.4%. As well, Fed chair Janet Yellen will continue her testimony about the semiannual Monetary Policy Report before Congress. On Thursday, the US releases three key events – Building Permits, Philly Fed Manufacturing Index and unemployment claims.

British inflation indicators continue to points upwards, led by CPI, which gained 1.8% in January. This was just shy of the forecast of 1.9%. With inflation close to the BoE’s target of 2.0% and the economy performing well, there is growing talk of the central bank raising interest rates in 2017. This sentiment was voiced after the BoE’s recent policy meeting by MPC member Kristin Forbes, who said that the BoE should raise rates if the economy remains strong and inflation continues to move higher. Forbes added that the bank should not put monetary policy on hold as a response to uncertainty over the Brexit process. However, Governor Mark Carney is hesitant to raise rates, despite respectable economic numbers. Carney has warned that the economy could lose steam as Britain prepares for tough negotiations over its exit from the European Union.

Janet Yellen is in the spotlight this week. The Fed chair testified before a Senate committee on Tuesday, and was surprisingly upfront about monetary policy, stating that she expected that the Fed would raise rates in the near future. Yellen stated that “waiting too long to remove accommodation would be unwise”, referring to the re-hot labor market and expectations that inflation would reach the Fed’s target of 2 percent. Will the Fed opt to raise rates in March or in June? The markets will be looking for clues on the timing of a move, as Yellen continues her testimony on Thursday before the House Financial Services Committee. Either way, further tightening from the Fed is good news for the US dollar, which should continue to move higher against the pound and other major currencies.

Yellen Testimony Headlines Lively US Session

GBP/USD Fundamentals

Wednesday (February 15)

• 9:30 British Average Earnings Index. Estimate 2.8%. Actual 2.6%
• 9:30 British Claimant Count Change. Estimate +1.1. Actual -42.4K
• 9:30 British Unemployment Rate. Estimate 4.8%. Actual 4.8%
• 13:30 US CPI. Estimate 0.3%. Actual 0.6%
• 13:30 US Core CPI. Estimate 0.2%. Actual 0.3%
• 13:30 US Core Retail Sales. Estimate 0.4%. Actual 0.8%
• 13:30 US Retail  Sales. Estimate 0.1%. Actual 0.4%
• 13:30 US Empire State Manufacturing Index. Estimate 7.2. Actual 18.7
• 14:15 US Capacity Utilization Rate. Estimate 75.6%. Actual 75.3%
• 14:15 US Industrial Production. Estimate 0.1%. Actual -0.3%
• 14:30 British CB Leading Index. Actual 0.0%
• 15:00 US Fed Chair Janet Yellen Speech
• 15:00 US Business Inventories. Estimate 0.5%. Actual 0.4%
• 15:00 US NAHB Housing Market Index. Estimate 68. Actual 65
• 15:30 US Crude Oil Inventories. Estimate 3.7M. Actual 9.5M
• 17:45 US FOMC Member Patrick Harker Speaks
• 21:00 US TIC Long-Term Purchases. Estimate 191.1B

Thursday (February 16)

• 13:30 US Building Permits. Estimate 1.23M
• 13:30 US Philly Fed Manufacturing Index. Estimate 18.5 points
• 13:30 US Unemployment Claims. Estimate 243K

*All release times are GMT

*Key events are in bold

GBP/USD for Wednesday, February 15, 2017

GBP/USD February 15 at 11:40 EST

Open: 1.2468 High: 1.2471 Low: 1.2383 Close: 1.2468

GBP/USD Technical

• GBP/USD edged higher in the Asian session. The pair posted losses in the European session but has recovered in North American trade
• 1.2351 is providing support
• 1.2471 is a weak resistance line

Further levels in both directions:

• Below: 1.2351, 1.2272 and 1.2143
• Above: 1.2471, 1.2579, 1.2674 and 1.2775
• Current range: 1.2351 to 1.2471

OANDA’s Open Positions Ratio

In the Wednesday session, the GBP/USD ratio shows long positions with a majority (54%). 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.