GBP/USD – British pound gains ground higher as GDP matches forecast

GBP/USD has moved higher in the Wednesday session. In North American trade, GBP/USD is trading at 1.3085, up 0.26% on the day. In the U.K., the monthly GDP release posted slight gain of 0.2%, matching the estimate. There was positive news on the manufacturing front, as manufacturing production climbed 0.9%, crushing the estimate of 0.2%. Over in the U.S., CPI was stronger than expected, with gain of 0.4%, above the estimate of 0.3%. Core CPI remained steady at 0.1%, shy of the estimate of 0.2%. Later in the day, the FOMC releases the minutes of the March policy meeting. On Thursday, the U.S. releases PPI.

The global trade war has taken a toll on manufacturing sectors worldwide, but British manufacturing data is pointing upwards. Manufacturing production in February climbed 0.9%, after a gain of 0.8% a month earlier. Last week, manufacturing PMI jumped to 55.1, its strongest gain in a year. The numbers are certainly positive, but could be a result of stockpiling as manufacturers brace for shortages once Britain leaves the European Union. Meanwhile, the latest Brexit extension expires on Friday, and both sides are keen to avoid a no-deal Brexit. Prime Minister May is seeking another short extension. European leaders have suggested a longer period, perhaps a year, but that is likely to inflame many of May’s conservative colleagues, who want to depart the EU as soon as possible. May is also holding talks with opposition leader Jeremy Corbyn, hoping to find some common ground in order to break the deadlock in parliament over Brexit.

On Wednesday, investors will be keeping a close look at Federal Reserve, which releases the minutes of the March meeting. At the meeting, the Fed said it would start tapering the reduction of its balance sheet in May. This marks a loosening of policy, and comes in response to weaker economic data out of the U.S. in recent months. The minutes should be treated as a market-mover, and if the minutes are dovish, investors could become sour on the U.S. dollar.

Global growth downgrade hits sentiment

GBP/USD Fundamentals

Wednesday (April 10)

• 4:30 British GDP. Estimate 0.2%. Actual 0.2%
  
• 4:30 British Manufacturing Production. Estimate 0.2%. Actual 0.9%
  
• 8:30 US CPI. Estimate 0.3%. Actual 0.4%
  
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
• 10:30 US Crude Oil Inventories. Estimate 2.6M
• 11:50 US FOMC Member Quarles Speaks
• 13:01 US 10-year Bond Auction
• 14:00 US FOMC Meeting Minutes
• 14:00 US Federal Budget Balance. Estimate -194.7B

Thursday (April 11)

• All Day – OPEC Meetings
• 8:30 US PPI. Estimate 0.3%
• 8:30 US Core PPI. Estimate 0.2%
• 8:30 US Unemployment Claims
• 14:00 US FOMC Meeting Minutes

Thursday (April 11)

• All Day – OPEC Meetings
• 8:30 US PPI. Estimate 0.3%
• 8:30 US Core PPI. Estimate 0.2%
• 8:30 US Unemployment Claims

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, April 10, 2019

GBP/USD April 10 at 11:45 DST

Open: 1.3052 High: 1.3119 Low: 1.3045 Close: 1.3085

GBP/USD Technical

GBP/USD was flat in the Asian session and posted slight gains in European trade. The pair has recorded slight gains in the North American session

• 1.3070 is providing support. It is a weak line
• 1.3170 is the next resistance line
• Current range: 1.3070 to 1.3170

Further levels in both directions:

• Below: 1.3070, 1.2910, 1.2841 and 1.2729
• Above: 1.3170, 1.3258 and 1.3362

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