GBP/USD – British pound subdued on lack of fundamentals

The British pound is unchanged in the Monday session. In North American trade, GBP/USD is trading at 1.3272, up 0.05% on the day. On the release front, there are no British events and only one U.S indicator. New Home Sales jumped to 689 thousand, well above the estimate of 665 thousand. On Tuesday, the U.K publishes CBI Realized Sales and the U.S will release CB Consumer Confidence.

There were no surprises on Thursday as the Bank of England held the course on interest rates, pegging the benchmark rate at 0.50% for a sixth straight month. However, the markets had expected the vote on rates to be 7-2, so the vote of 6-3 was more hawkish than expected. Still, the pound managed only slight gains following the announcement. Attention will now shift to the August policy meeting, with a reasonable chance that the BoE will press the rate trigger and raise rates by a quarter-point to 0.75 percent.

Trade tensions between the U.S and its trading partners continue to escalate, and friction between the EU and the Trump administration could have a negative impact on British workers and companies. On Friday, the EU slapped retaliatory tariffs of some 25% on $3.3 billion of U.S goods. This move was in response to U.S tariffs on EU steel and aluminum imports. However, President Trump has more cards up his sleeves and has threatened to impose 20% tariffs on EU vehicles. The EU has enough on its plate without a trade war with the U.S, and has launched a complaint over the U.S tariffs with the World Trade Organization. Still, the EU has not shied away from retaliatory moves, with EU Commission President Jean-Claude Juncker saying that the EU’s response would be “clear but measured”.

With little in the way of fundamental releases early in the week, the markets are keeping a wary eye on the escalating trade dispute between the U.S. and its major trading partners. The heads of central banks have expressed alarm, and last week, Jerome Powell and Mario Draghi sounded gloomy about the repercussions that a trade war could have on economic growth and monetary policy. On Sunday, the Bank of International Settlements (BIS), which acts as an umbrella group for some 60 central banks also weighed in. The head of the BIS, Augustin Carstens, warned that recent protectionist moves could hamper global growth and financial stability, and could have negative side effects on the currency markets. At the same time, the BIS expressed support for the Federal Reserve raising interest rates gradually and for the ECB heading towards normalization as it winds up its massive asset program.

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GBP/USD Fundamentals

Monday (June 25)

• 10:00 US New Home Sales. Estimate 665K. Actual 689K

Tuesday (June 26)

• 6:00 British CBI Realized Sales. Estimate 10
• 10:00 US CB Consumer Confidence. Estimate 127.6

*All release times are DST

*Key events are in bold

GBP/USD for Monday, June 25, 2018

GBP/USD June 25 at 11:45 DST

Open: 1.3265 High: 1.3290 Low: 1.3221 Close: 1.3272

GBP/USD Technical

GBP/USD was flat in the Asian session. In European trade, the pair edged lower but then reversed directions and posted gains. GBP/USD is showing little movement in North American trade

• 1.3263 is fluid. Currently, it is a weak support line.
• 1.3494 is the next resistance line
• Current range: 1.3263 to 1.3494

Further levels in both directions:

• Below: 1.3263, 1.3186, 1.3088 and 1.2996
• Above: 1.3494, 1.3613 and 1.3726

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