GBP/USD – Pound Climbs as Britain Sweetens Brexit Pot

The British pound has posted considerable gains in the Wednesday session. In North American trade, GBP/USD is trading at 1.3443, up 0.77% on the day. On the release front, British Net Lending to Individuals dropped to GBP 4.8 billion, above the forecast of GBP 4.3 billion. Bank of England Governor Mark Carney spoke at an event in London. In the US, Preliminary GDP for the third quarter came in at 3.3%, matching the forecast. Pending Home Sales jumped to 3.5%, crushing the estimate of 1.1%. As well, Fed Chair Janet Yellen testifies before a congressional committee. On Thursday, the US releases Personal Spending and unemployment claims.

British Prime Minister Theresa May has blinked first, going a long way to meeting the European demands on Britain’s bill for leaving the European Union. The Europeans had demanded EUR 60 billion, while the UK had countered with EUR 20 billion. However, the UK has upped its offer significantly, and the final amount could be as high as EUR 50-60 billion. The British government is anxious to start talks on a trade deal with the EU, and this offer should placate Brussels and pave the way for trade talks to begin in December. Another thorny issue is the border between Northern Ireland and Ireland. Britain has ruled out having the north remain in a customs union with the EU after Brexit, but Ireland is insisting that there not be a hard border.

There was positive news from the banking sector on Tuesday, as all seven major UK banks passed the BoE’s stress tests. This is a reliable indication that the banking sector is in decent shape, despite nagging concerns about the toll that Brexit could take the British economy. Still, investors were quick to seize on negative comments from BoE Governor Mark Carney, who warned that in the case of a “disorderly” Brexit, the financial sector would face “some quite material economic costs”. Carney’s warning briefly sent the pound lower, but it managed to recover.

GBP/USD Fundamentals

Wednesday (November 29)

• 4:30 British Net Lending to Individuals. Estimate 4.3B. Actual 4.8B
• 4:30 British M4 Money Supply. Estimate 0.3%. Actual 0.6%
• 4:30 British Mortgage Approvals. Estimate 65K. Actual 65K
• 8:30 US Preliminary GDP. Estimate 3.3%. Actual 3.3%
• 8:30 US FOMC Member Charles Dudley Speaks
• 8:30 US Preliminary GDP Price Index. Estimate 2.2%. Actual 2.1%
• 9:00 BoE Governor Mark Carney Speaks
• 9:45 BoE Deputy Governor Member David Ramsden Speaks
• 10:00 US Fed Chair Janet Yellen Testifies
• 10:00 US Pending Home Sales. Estimate 1.1%. Actual 3.5%
• 10:30 US Crude Oil Inventories. Estimate -2.5M. Actual -3.4M
• 14:00 US Beige Book
• 19:01 British GfK Consumer Confidence. Estimate -9
• All Day – OPEC Meetings

Thursday (November 30)

• 8:30 US Unemployment Claims. Estimate 241K
• 8:30 US Personal Spending. Estimate 0.2%

*All release times are GMT

*Key events are in bold

GBP/USD for Wednesday, November 29, 2017

GBP/USD November 29 at 11:40 EDT

Open: 1.3340 High: 1.3430 Low: 1.3340 Close: 1.3443

GBP/USD Technical

GBP/USD was flat in the Asian session. The pair posted gains in the European session and continues to move upwards in  North American trade

• 1.3402 has switched to a support role following gains by GBP/USD
• 1.3503 is the next resistance line

Further levels in both directions:

• Below: 1.3402, 1.3321 and 1.3186
• Above: 1.3503, 1.3655 and 1.3809
• Current range: 1.3402 to 1.3503

OANDA’s Open Positions Ratio

GBP/USD ratio is showing little movement in the Wednesday session. Currently, short positions have a majority (52%), indicative slight trader bias towards GBP/USD reversing directions and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.