GBP/USD – Pound Edges Lower, US Posts Mixed Construction Data

The British pound has posted slight losses in the Wednesday session. In the North American session, GBP/USD is trading at 1.3477, down 0.21% on the day. On the release front, British CB Leading Index declined 0.2%. In the US, construction numbers were mixed. Building Permits remained steady at 1.35 million, matching the forecast. Housing Starts dropped to 1.29 million, short of the estimate of 1.32 million. On Thursday, the U.S releases Philly Fed Manufacturing Index and unemployment claims.

British employment numbers were a mix on Tuesday. Unemployment claims and wage growth both missed their forecasts, but the unemployment rate remained steady, and the participation rate rose to 75.6%, the highest rate ever recorded. Policymakers at the Bank of England will have to digest the mixed job numbers, as the employment market and wage growth will be important factors in the bank’s thought process regarding rate future rate hikes. Weak economic numbers dissuaded the BoE from raising rates last week, but if second-quarter data is stronger, the bank could press the rate trigger at its August meeting.

In the U.S, retail sales and core retail sales posted gains in April, although both indicators fell short of the estimates. Still, consumer spending is improving after a sluggish first quarter. Investors liked what they saw, and the US dollar was broadly higher on Tuesday. At the same time, a new concern is higher gas prices, which could put a dent in consumers’ wallets and hurt spending. Oil prices have hit their highest levels in over 3 years, and with the US leaving the Iran nuclear deal and escalating tensions in the Middle East, gasoline prices could remain at high levels.

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GBP/USD Fundamentals

Wednesday (May 16)

• 8:30 US Building Permits. Estimate 1.35M. Actual 1.35M
• 8:30 US FOMC Member Raphael Bostic Speaks
• 8:30 US Housing Starts. Estimate 1.32M. Actual 1.29M
• 9:15 US Capacity Utilization Rate. Estimate 78.4%. Actual 78.0%
• 9:15 US Industrial Production. Estimate 0.6%. Actual 0.7%
• 9:30 British CB Leading Index. Actual -0.2%
• 10:00 US Mortgage Delinquencies. Actual 4.63%
• 10:30 US Crude Oil Inventories. Estimate -1.1M. Actual -1.4M

Thursday (May 17)

• 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
• 8:30 US Unemployment Claims. Estimate 219K

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, May 16, 2018

GBP/USD May 16 at 12:00 DST

Open: 1.3505 High: 1.3521 Low: 1.3455 Close: 1.3477

GBP/USD Technical

GBP/USD showed little movement in the Asian session. The pair lost ground in European trade but has recovered some of those losses in the North American session

• 1.3402 is providing support
• 1.3494 was tested in resistance earlier. It is a weak line
• Current range: 1.3402 to 1.3494

Further levels in both directions:

• Below: 1.3402, 1.3301 and 1.3186
• Above: 1.3494, 1.3613, 1.3712 and 1.3796

OANDA’s Open Positions Ratio

GBP/USD ratio is showing some movement towards short positions. Currently, long positions have a majority (59%), indicative of 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.