GBP/USD – Pound dips lower as BoE stays pat on rate

GBP/USD is steady in the Thursday session. In North American trade, GBP/USD is trading at 1.3022, down 0.22% on the day. On the release front, British Construction PMI improved to 50.5, edging above the estimate of 50.4. The Bank of England maintained the benchmark rate at 0.75%. In the U.S., unemployment claims jumped to 230 thousand, well above the estimate of 220 thousand. On Friday, British Services PMI is expected to rise to 50.4 points. In the U.S., the focus will be on employment data, with the release of April nonfarm payrolls and wage growth.

The BoE maintained interest rates, but BoE Governor Mark Carney had a hawkish message for the markets. Carney said that there could be a number of rate hikes from the bank, if Brexit is resolved and growth and inflation point higher. The markets have priced in just one rate hike until 2021. Carney’s comments didn’t make much of an impact on investors, as the pound has lost ground on Thursday.

The Federal Reserve also made no changes to the benchmark rate. The rate statement noted that inflation pressures are muted and that the FOMC would remain patient regarding future rate movements. Jerome Powell reinforced this stance at a follow-up press conference, saying “we don’t see a strong case for moving in either direction”. The Fed is already on record as saying it does not expect to raise rates before 2020, and with inflation levels persistently below the Fed’s target of 2.0%, the Fed can afford to continue its wait-and-see stance.

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GBP/USD Fundamentals

Thursday (May 2)

• 4:30 British Construction PMI. Estimate 50.4. Actual 50.5
  
• 7:00 BoE Inflation Report
• 7:00 BoE Official Bank Rate Votes. 0-0-9. Actual 0-0-9
  
• 7:00 BoE Monetary Policy Summary
• 7:00 BoE Official Bank Rate. Estimate 0.75%. Actual 0.75%
  
• 7:00 BoE Asset Purchase Facility. Estimate 435B. Actual 435B
  
• 7:00 BoE Asset Purchase Facility Votes. Estimate 0-0-9. Actual 0-0-9
  
• 7:30 BoE Governor Carney Speaks
• 7:30 US Challenger Job Cuts. Actual 10.9%
• 8:30 US Preliminary Nonfarm Productivity. Estimate 0.9%. Actual 3.6%
  
• 8:30 US Preliminary Unit Labor Costs. Estimate 2.4%. Actual -0.9%
  
• 8:30 US Unemployment Claims. Estimate 220K. Actual 230K
  
• 10:00 US Factory Orders. Estimate 1.0%. Actual 1.9%
  
• 10:30 US Natural Gas Storage. Estimate 107B. Actual 123B
  
• Tentative – Treasury Currency Report

Friday (May 3)

• 4:30 British Services PMI. Estimate 50.4
• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 181K
• 8:30 US Unemployment Rate. Estimate 3.8%
• 10:00 US ISM Non-Manufacturing PMI. Estimate 57.2

*All release times are DST

*Key events are in bold

GBP/USD for Thursday, May 2, 2019

GBP/USD May 2 at 11:20 DST

Open: 1.3050 High: 1.3080 Low: 1.3018 Close: 1.3022

GBP/USD Technical

GBP/USD was flat in the Asian session and has posted slight gains in European trade

• 1.2910 is providing support
• 1.3070 is the next resistance line
• Current range: 1.2910 to 1.3070

Further levels in both directions:

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

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