GBP/USD – Pound Rally Continues as US Consumer Spending Slows

The British pound continues to post gains in the Thursday session. In North American trade, GBP/USD is trading at 1.3531, up 0.90% on the day. On the release front, British Nationwide HPI came in at 0.1%, shy of the estimate of 0.2%. In the US, unemployment claims edged lower to 238 thousand, below the estimate of 241 thousand. Personal Spending dropped to 0.3%, marking a 4-month low. Still, this beat the estimate of 0.2%. On Friday, manufacturing numbers will be in focus, as the US and UK release manufacturing PMIs.

Britain wants to kick-start the languishing Brexit talks and talk trade with the Europeans. This may have been the catalyst for Prime Minister May to sweeten the pot and going a long way to meeting the EU demands on Britain’s divorce bill. The Europeans have demanded EUR 60 billion, while the UK had countered with EUR 20 billion. However, the UK has upped its offer significantly, and the final amount could be as high as EUR 50-60 billion. May is hoping that her improved offer will placate Brussels and pave the way for trade talks to begin in December. Another thorny issue on the Brexit plate is the status of the border between Northern Ireland and Ireland. Britain has ruled out having the north remain in a customs union with the EU after Brexit, but Ireland is insisting that there not be a hard border, and wants written guarantees from London as to the nature of the border after Brexit.

The US economy continues to perform well, and there was more good news on Wednesday, as Preliminary GDP for the third quarter posted a sharp gain of 3.3%. This was higher than the initial estimate of 3.0% and marked the fastest growth rate since Q3 of 2014. This was particularly impressive, as the southern US was battered by major hurricanes which caused significant economic damage. Consumer confidence levels are sky-high, but consumer consumption softened in the third quarter. However, business spending improved in the third quarter. Federal Reserve Chair Janet Yellen sounded upbeat about the economy, saying that the expansion was broad-based, across sectors of the economy.

GBP to Rise if Brexit Negotiations Resolve Deadlock

GBP/USD Fundamentals

Thursday (November 30)

• 2:00 British Nationwide HPI. Estimate 0.2%. Actual 0.1%
• 8:30 US Unemployment Claims. Estimate 241K. Actual 238K
• 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
• 8:30 US Personal Spending. Estimate 0.2%. Actual 0.3%
• 8:30 US Personal Income. Estimate 0.3%. Actual 0.4%
• 9:45 US Chicago PMI. Estimate 62.2. Actual 63.9
• 10:30 US Natural Gas Storage. Estimate -37B. Actual -33B
• 12:30 US FOMC Member Randal Quarles Speaks
• 13:00 US FOMC Member Robert Kaplan Speaks

Friday (December 1)

• 4:30 British Manufacturing PMI. Estimate 56.6
• 10:00 US ISM Manufacturing PMI. Estimate 58.4

*All release times are GMT

*Key events are in bold

GBP/USD for Thursday, November 30, 2017

GBP/USD November 30 at 11:25 EDT

Open: 1.3410 High: 1.3549 Low: 1.3407 Close: 1.3531

GBP/USD Technical

GBP/USD continues to break through resistance lines in the current rally. On Thursday, the pair posted gains in the Asian session. GBP/USD was flat in European trade and has resumed its upward movement in the North American session.

• 1.3503 has switched to a support role following sharp gains by GBP/USD on Thursday
• 1.3655 is the next resistance line

Further levels in both directions:

• Below: 1.3503, 1.3402, 1.3321 and 1.3186
• Above: 1.3655, 1.3809 and 1.3901
• Current range: 1.3503 to 1.3655

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in the Thursday session. Currently, short positions have a majority (53%), indicative slight trader bias towards GBP/USD reversing directions and moving lower.

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.