GBP/USD – Pound Starts Week With Gains, Markets Eye BoE Decision

The British pound has posted gains in the Monday session. In North American trade, GBP/USD is trading at 1.3179, up 0.39% on the day. On the release front, British Net Lending to Individuals came in at GBP 5.5 billion, matching the estimate. In the US, Personal Spending gained 1.0%, above the forecast of 0.8%. On Tuesday, the US will publish CB Consumer Confidence.

British consumer spending took a hit in October, according to last week’s British CBI Realized Sales report, which came in at -34 points. The soft reading, which was the sharpest drop since March 2009, was all the more surprising because the September reading showed a strong gain of 42 points. High inflation is likely having a chilling effect on consumer spending, a key driver of economic growth. The BoE will be taking note of the sharp drop in retail sales, as the Bank must decide at its policy meeting on Thursday whether to raise rates for the first time in a decade. Policymakers remain divided over a rate hike, which would be the first in a decade. Proponents of a rate increase point to inflation running at 3.0%, above the Bank’s target of 2.0%, but opponents argue that the economy is showing signs of weakness and a rate hike could hamper economic growth.

The week ended on a positive note in the US, as Advance GDP in third quarter jumped 3.0%, well above the estimate of 2.5%. The economy was boosted by strong consumer spending and business investment, as well as a strong export sector. The economy could have done even better in Q3, but hurricanes which hit Texas, Florida and Puerto Rico caused widespread damage. Consumer confidence remains strong, as Revised UoM Consumer Sentiment soared to 100.7 points in September, compared to 95.1 a month earlier. On Tuesday, CB Consumer Confidence is expected at 121.1 points. 

GBP/USD Fundamentals

Monday (October 30)

• 5:30 British Net Lending to Individuals. Estimate 5.5B. Actual 5.5B
• 5:30 British M4 Money Supply. Estimate +0.7%. Actual -0.2%
• 5:30 British Mortgage Approvals. Estimate 66K. Actual 66K
• 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
• 8:30 US Personal Spending. Estimate 0.8%. Actual 1.0%
• 8:30 US Personal Income. Estimate 0.4%. Actual 0.4%
• Tentative – US Loan Officer Survey
• 20:01 British GfK Consumer Confidence. Estimate -10K

Tuesday (October 31)

• 10:00 US CB Consumer Confidence. Estimate 121.1

*All release times are GMT

*Key events are in bold

GBP/USD for Monday, October 30, 2017

GBP/USD October 30 at 11:35 EDT

Open: 1.3129 High: 1.3202 Low: 1.3121 Close: 1.3179

GBP/USD Technical

GBP/USD ticked higher in the Asian session. The pair edged higher in European trade and is steady in the North American session

• 1.3122 is providing support
• 1.3224 has switched to a resistance role following losses by GBP/USD

Further levels in both directions:

• Below: 1.3122, 1.3022 and 1.2904
• Above: 1.3224, 1.3347, 1.3444 and 1.3514
• Current range: 1.3122 to 1.3224

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is showing long positions with a majority (56%), indicative of trader bias towards GBP/USD continuing to move higher.

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.