GBP/USD – Pound Unchanged, Tusk Takes PM May to Task

The British pound is unchanged in the Wednesday session. In North American trade, GBP/USD is trading at 1.3886, down 0.01% on the day. In economic news, there are no major indicators in the UK. In the US, ADP Nonfarm Payrolls report ticked higher to 235 thousand, easily beating the estimate of 199 thousand. On Thursday, the US releases unemployment claims.

The game of hardball between Britain and the European Union continues. On Wednesday, Donald Tusk, president of the European Council, advised Prime Minister May to “pink’ her red lines on Brexit, if Britain wants to maintain a close economic relationship with the bloc. May has insisted that there will be no customs union, and the European Court of Justice will have no jurisdiction over the UK. Last week, the EU published draft negotiating guidelines for Brexit, and the guidelines warned of “negative economic consequences” if Britain does not soften its position. Tusk added that he does not want to build a wall with Britain, and the EU could offer Britain a free trade agreement, with zero tariffs. At the same time, Tusk warned that Brexit will make trade between the two sides “complicated and costly” and the EU would not allow Britain to cherry pick in any future trade arrangement. EU members are expected to sign off on the negotiating guidelines at a summit in late March, which is likely to heat up the tense relationship between London and Brussels.

In the US, tensions over proposed tariffs on steel imports continue to hurt the US dollar. President Trump appears set on applying stiff tariffs of 25% on steel, much to the consternation of the European Union and other US trading partners. However, there is plenty of domestic opposition to Trump’s plan, as Republican lawmakers, including House Speaker Paul Ryan, have come out strongly against the move. If Trump doesn’t back down, the Republicans could even resort to legislation to limit Trump’s authority on tariffs. The announcement of the tariffs last week sent the dollar broadly lower, and if the tariffs are introduced, negative investor sentiment could continue to weigh on the dollar.

GBP/USD Fundamentals

Wednesday (March 7)

• 3:30 British Halifax HPI. Estimate 0.4%. Actual 0.4%
• 8:00 US FOMC Member Raphael Bostic Speaks
• 8:15 US ADP Nonfarm Employment Change. Estimate 199K. Actual 235K
• 8:20 US FOMC Member William Dudley Speaks
• 8:30 US Revised Nonfarm Productivity. Estimate -0.1%. Actual 0.0%
• 8:30 US Revised Unit Labor Costs. Estimate 2.1%. Actual 2.5%
• 8:30 US Trade Balance. Estimate -55.1B. Actual -56.6B
• 10:30 US Crude Oil Inventories. Estimate 2.6M. Actual 2.4M
• 14:00 US Beige Book
• 15:00 US Consumer Credit. Estimate 17.5B
• 19:01 British RICS House Price Balance. Estimate 7%

Thursday (March 8)

• 8:30 US Unemployment Claims. Estimate 220K

*All release times are GMT

*Key events are in bold

GBP/USD for Wednesday, March 7, 2018

GBP/USD March 7 at 11:55 EDT

Open: 1.3888 High: 1.3912 Low: 1.3846 Close: 1.3886

GBP/USD Technical

GBP/USD was flat in the Asian session. The pair edged lower in European trade but recovered. GBP/USD is flat in North American trade.

• 1.3809 is providing support
• 1.3901 was tested earlier in resistance and remains a weak line

Current range: 1.3809 to 1.3901

Further levels in both directions:

• Below: 1.3809, 1.3744, 1.3613 and 1.3480
• Above: 1.3901, 1.4010 and 1.4128

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in the Wednesday session. Currently, long and short positions are almost evenly split, indicative of a lack of trader bias towards GBP/USD.

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.