GBP/USD – British pound gains ground as U.S employment indicators dip

GBP/USD has posted gains in the Thursday session. In North American trade, the pair is trading at 1.2762, up 0.21% on the day. There are no major indicators in the U.K. In the U.S., job employment numbers were soft. ADP nonfarm payrolls plunged to 179 thousand, well off the estimate of 196 thousand. This was the lowest level since May. Unemployment claims edged lower to 231 thousand, but this was higher than the estimate of 226 thousand. There was better news from the services sector, as ISM Non-Manufacturing PMI improved to 60.7, easily beating the estimate of 59.1 points. On Friday, the U.S. releases wage growth and nonfarm payrolls.

The U.S dollar started the week with losses, after the dramatic announcement that President Trump had agreed to suspend new tariffs against China for 90 days. However, investor optimism over the truce quickly dissipated, enabling the dollar to recover. Another concern for investors is an inverted yield curve in U.S Treasuries, which in the past has been a reliable indicator that a recession is coming.

Prime Minister May’s difficulties with the Brexit withdrawal agreement seem to be growing by the day. On Tuesday, parliament found the May government in contempt of parliament, which forced the release of the Attorney General’s full legal advice to the government concerning Brexit (the government had tried to get by with the release of an overview of the legal advice on Monday). The full report, which was published on Tuesday, says that if the backstop solution over the Irish border is implemented, Britain could find itself tied up with the EU indefinitely. May tried to downplay the document, but lawmakers against the withdrawal agreement are using it as further ammunition, and May’s uphill battle to pass the withdrawal agreement in parliament is only getting steeper. What happens if May loses the vote in parliament? That would plunge the country into unchartered waters. Possible scenarios include a hard Brexit in March or May resigning after the vote in parliament and calling general elections.

Aussie falls as trade surplus narrows

Numerous crosscurrents are coming to a head :OPEC

GBP/USD Fundamentals

Thursday (December 6)

• All Day – OPEC Meetings
• 5:00 BoE Deputy Governor Ramsden Speaks
• 5:34 British 30-year Bond Auction. Actual 1.91/2.4
• 7:30 US Challenger Job Cuts. Actual 51.5%
• 8:15 US ADP Nonfarm Employment Change. Estimate 196K. Actual 179K
• 8:30 US Revised Nonfarm Productivity. Estimate 2.3%. Actual 2.3%
• 8:30 US Revised Unit Labor Costs. Estimate 1.1%. Actual 0.9%
• 8:30 US Trade Balance. Estimate -55.2B. Actual -55.5B
• 8:30 US Unemployment Claims. Estimate 226K. Actual 231K
• 9:45 US Final Services PMI. Estimate 54.4. Actual 54.7. Actual 60.7
• 10:00 US Factory Orders. Estimate -1.9%. Actual -2.1%
• 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2
• 11:00 US Crude Oil Inventories. Estimate -1.3M. Actual -7.3M
• 12:15 US FOMC Member Bostic Speaks
• 18:30 US FOMC Member Williams Speaks
• 18:45 US Federal Reserve Chair Powell Speaks

Friday (December 7)

• 4:30 British Consumer Inflation Expectations
• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 200K
• 8:30 US Unemployment Rate. Estimate 3.7%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.1

*All release times are EST

*Key events are in bold

GBP/USD for Thursday, December 6, 2018

GBP/USD December 6 at 11:35 EST

Open: 1.2734 High: 1.2801 Low: 1.2699 Close: 1.2762

GBP/USD Technical

GBP/USD was flat in the Asian session. The pair posted ticked lower in European trade but then reversed directions and posted gains. GBP/USD has ticked higher in North American trade

• 1.2706 is providing support
• 1.2812 is a weak resistance line
• Current range: 1.2706 to 1.2812

Further levels in both directions:

• Below: 1.2706, 1.2589 and 1.2488
• Above: 1.2812, 1.2915, 1.3048 and 1.3173

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