GBP/USD – British pound pushes above 1.32 as wage growth rises

GBP/USD has gained ground in the Tuesday session. In the North American session, the pair is trading at 1.3198, up 0.34% on the day. On the release front, the focus was on British job numbers. Wage growth climbed 2.7%, edging above the estimate of 2.6%. The unemployment rate remained unchanged at 4.0%, matching the estimate. However, unemployment claims jumped to 18.5 thousand, well above the estimate of 4.5 thousand. In the U.S, there are no major events on the schedule. JOLTS Job Openings is expected to dip to 6.90 million. The markets are still waiting for the U.S Treasury to release its semi-annual currency report, which may occur later on Tuesday. On Wednesday, the U.K releases a host of inflation indicators, led by CPI. The U.S will release Building Permits and Housing Starts, and the Federal Reserve will publish its minutes from the September policy meeting.

EU leaders are meeting in Brussels, and officials had hoped that the summit would include a draft statement on Brexit, but this plan has been shelved due to a deadlock over the Irish border. This is certainly not good news for Prime Minister May, who remains embattled as the Brexit negotiations remain painfully deadlocked. The EU is insisting that it will not sign a withdrawal agreement with Britain, unless there is a backstop which allows Northern Ireland to remain in a customs union with the EU after Brexit. However, the British government is unlikely to agree to such a move, since it would require regulatory barriers within the United Kingdom. With plans for a Brexit statement at Wednesday’s meeting on hold, a Brexit statement with have to wait until EU leaders meet in November or even December, which is extremely close to the Brexit deadline in March 2019.

U.S indicators were a mixed bag on Monday, as retail sales were soft but manufacturing data was solid. Retail Sales posted a meager gain of 0.1%, shy of the estimate of 0.4%. Core Retail Sales surprised with a decline of 0.1%, compared to an estimate of 0.4%. This marked the first decline since June 2017. There was better news from the manufacturing front, as Empire State Manufacturing Index strengthened to 21.1, above the estimate of 20.4 points.

Asia Market update : A time out

Risk remains on the back foot

The buck cannot find a bid

GBP/USD Fundamentals

Tuesday (October 16)

• 4:30 British Average Earnings Index. Estimate 2.6%. Actual 2.7%
• 4:30 British Unemployment Rate. Estimate 4.0%. Actual 4.0%
• 4:30 British Claimant Count Change. Estimate 4.5K. Actual 18.5K
• 9:15 BoE Deputy Governor Jon Cunliffe Speaks
• 9:15 US Capacity Utilization Rate. Estimate 78.2%
• 9:15 US Industrial Production. Estimate 0.2%
• 10:00 US JOLTS Job Openings. Estimate 6.90M
• 10:00 US NAHB Housing Market Index. Estimate 68
• 16:00 US TIC Long-Term Purchases. Estimate 50.3B
• 16:15 US FOMC Member Mary Daly Speaks
• Tentative – US Treasury Currency Report

Wednesday (October 17)

• 4:30 British CPI. Estimate 2.6%
• 8:30 US Building Permits. Estimate 1.28M
• 8:30 US Housing Starts. Estimate 1.21M
• 10:30 US Crude Oil Inventories
• 12:10 US FOMC Member Lael Brainard Speaks
• 14:00 US FOMC Meeting Minutes

*Key events are in bold

GBP/USD for Tuesday, October 16, 2018

GBP/USD October 16 at 12:20 DST

Open: 1.3153 High: 1.3153 Low: 1.3237 Close: 1.3198

GBP/USD Technical

GBP/USD ticked lower in the Asian session The pair posted gains in European trade. GBP/USD has posted small losses in North American trade

• 1.3173 is providing support
• 1.3301 is the next resistance line
• Current range: 1.3173 to 1.3301

Further levels in both directions:

• Below: 1.3173, 1.2966, 1.2852 and 1.2723
• Above: 1.3301, 1.3447 and 1.3527

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