GBP/USD – Pound Moves Higher, US GDP and Trump Loom

GBP/USD has posted gains in the Monday session. In North American trade, GBP/USD is trading at 1.2470. On the release front, US Core Durable Goods Orders declined 0.2%, short of the estimate of +0.5%. However, Durable Goods Orders jumped 1.8%, beating the forecast of 1.6%. Pending Home Sales disappointed with a sharp drop of 2.8%, compared to the estimate of a 1.1% gain. The sole UK event is GfK Consumer Confidence. On Tuesday, the US publishes Preliminary GDP and CB Consumer Confidence. As well, President Trump will address a joint session of Congress.

US numbers were soft on Friday. Revised UoM Consumer Sentiment dropped to 96.3 in February, compared to 98.5 a month earlier. Still, this figure edged above the forecast of 96.1. On the housing sector, New Home Sales improved to 555 thousand in January, but this was well short of the forecast of 575 thousand. This follows Existing Home Sales, which jumped to 5.69 million, above the estimate of 5.55 million.

It’s been a tough first month in office for Donald Trump. The new president has been involved in constant sparring with the media and continues to struggle trying to fill key cabinet positions. Trump will address Congress on Tuesday and the nation will be listening closely. Will we see the combative, outspoken Trump, or will he opt for a more conciliatory approach? In order to pass key legislation, Trump will have to make nice with lawmakers from both sides of the fence, and this speech would be an ideal time to offer a hand of cooperation rather than combat. The markets will be looking for some details about the administration’s economic plan – if Trump fails to deliver, market sentiment could sour, dragging down the US dollar.

Will the Bank of England make a move at its next policy meeting? Despite uncertainty over Britain’s vote to leave the EU, the British economy continues to outpace expectations. Still, BoE Governor Mark Carney continues to warn that Brexit will take a toll on the economy, and his cautious stance was echoed by BoE Chief Economist Andy Haldane last week. Haldane warned that a sharp increase in market expectations for an interest rate could hurt the “fragile” economy. Haldane expressed support for Carney’s neutral stance over interest rate movement. Although inflation levels have risen and are close to the BoE’s target of 2 percent, Carney has signaled that the BoE is in no rush to raise interest rates. Higher rates would boost the weak British pound, which has dropped a whopping 17 percent since the Brexit vote back in June.

GBP/USD Fundamentals

Monday (February 27)

• 8:30 US Core Durable Goods Orders. Estimate +0.5%. Actual -0.2%
• 8:30 US Durable Goods Orders. Estimate 1.6%. Actual 1.8%
• 10:00 US Pending Home Sales. Estimate 1.1%. Actual -2.8%
• 11:00 US FOMC Member Robert Kaplan Speech
• 19:01 British GfK Consumer Confidence. Estimate -6

Tuesday (February 28)

• 8:30 US Preliminary GDP. Estimate 2.1%
• 10:00 US CB Consumer Confidence. Estimate 111.1

*All release times are GMT

*Key events are in bold

GBP/USD for Monday, February 27, 2017

GBP/USD February 27 at 11:30 EST

Open: 1.2399 High: 1.2474 Low: 1.2379 Close: 1.2467

GBP/USD Technical

• GBP/USD showed limited movement in the Asian and European sessions. The pair has moved higher in  North American trade
• 1.2351 is providing support
• 1.2471 was tested earlier in resistance and remains a weak 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

GBP/USD ratio is showing little movement in the Monday session. Currently, long positions have a majority (60%), 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.