GBP/USD – British Pound Halts Slide as UK Surprises With Budget Surplus

The British pound has steadied in the Tuesday session, after recording five consecutive losing sessions. In North American trade, GBP/USD is trading at 1.3975, up 0.25% on the day. On the release front, the UK posted a budget surplus of GBP 0.3 billion in March, beating the estimate of GBP -1.1 billion. CBI Industrial Order Expectations, which has dropped sharply in recent months, held steady at 4 points. This matched the forecast. Over in the US, CB Consumer Confidence jumped to 128.7, beating the estimate of 126.0 points. US New Home Sales also looked sharp, jumping to 694 thousand and crushing the estimate of 625 thousand. This marked a 4-month high. However, manufacturing data was not as strong, as Richmond Manufacturing Index dropped 3 points, well off the estimate of a 16-point gain. This was the first contraction since October 2016.

The US dollar started the week with strong gains, courtesy of higher yields for 10-year US treasury bills, which rose to 2.996% on Monday. The T-bills punched past the symbolic 3% threshold on Tuesday. Higher yields for US-T bills have made them more attractive than European or Japanese counterparts and pushed the US currency higher. With oil pushing above $70 a barrel, there are concerns that inflation will rise, which has pushed bond prices lower and yields upwards. The dollar has also benefitted from a reduction in geopolitical risk, with an easing of tensions between North and South Korea, and a lull in the conflict in Syria.

Is the US-China trade war heading to a trade truce? The markets have been marked by volatility in recent weeks, in response to tariffs which the US and China have imposed on the other. US President Trump has threatened to slap tariffs on up to $150 billion on Chinese goods, and China has promised to respond with heavy tariffs on US imports. The escalating crisis has raised fears that a trade war between the two economic giants could slow down Chinese growth and trigger a global recession. However, US Treasury Secretary Steven Mnuchin sought to lower the rhetoric on the weekend, saying that he was considering a trip to China, adding he was “cautiously optimistic” that the two sides could resolve the trade dispute.

USD Back with a vengeance

US Yields Reach 3%

US Dollar Bulls Look for Support Signals

GBP/USD Fundamentals

 Tuesday (April 24)

• 4:30 British Public Sector Net Borrowing. Estimate 1.1B. Actual -0.38B
• 6:00 British CBI Industrial Order Expectations. Estimate 4. Actual 4
• 9:00 US HPI. Estimate 0.5%. Actual 0.6%
• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.3%. Actual 6.8%
• 10:00 US CB Consumer Confidence.  Estimate 126.0. Actual 128.7
• 10:00 US New Home Sales. Estimate 625K. Actual 694K
• 10:00 US Richmond Manufacturing Index. Estimate 16. Actual -3

*All release times are DST

*Key events are in bold

GBP/USD for Tuesday, April 24, 2018

GBP/USD April 24 at 12:00 DST

Open: 1.3939 High: 1.3984 Low: 1.3919 Close: 1.3975

GBP/USD Technical

GBP/USD showed negligible movement in the Asian session. The pair has posted slight gains in the European and North American sessions

• 1.3901 is providing support
• 1.4010 is the next resistance line
• Current range: 1.3901 to 1.4010

Further levels in both directions:

• Below: 1.3901, 1.3796 and 1.3712
• Above: 1.4010, 1.4128, 1.4227 and 1.4345

OANDA’s Open Positions Ratio

GBP/USD ratio is showing little movement in the Tuesday session. Currently, short and long 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.