GBP/USD – Pound Dips as US Dollar Shows Broad Gains

The British pound has headed lower in the Tuesday session, erasing most of the gains seen on Monday. In North American trade, GBP/USD is trading at 1.4162, down 0.48% on the day. In the UK, the Financial Policy Committee released the minutes of its March meeting. In the US, CB Consumer Confidence dropped to 127.7, missing the forecast of 131.2 points. As well, the Richmond Manufacturing Index dropped sharply to 15 points, well off the estimate of 23 points. On Wednesday, the US releases Final GDP and the UK publishes CBI Realized Sales and GfK Consumer Confidence.

The Financial Policy Committee (FPC), which looks at the financial stability in the UK, took note of the likelihood of rate hikes during the year. In the minutes, policymakers stated that most households can afford their mortgages at current rate levels of 0.50%, but would have trouble if rates climbed to 2% or higher. The BoE is widely expected to raise rates by a quarter point in May, to 0.75 percent. Years of low rates have resulted in high levels of mortgage debt as well as consumer debt, and the FPC minutes are a clear signal that the BoE will need to factor in the impact on consumers as part of its rate policy.

The tariff spat between China and the US has shaken up global stock markets and also caused volatility in the currency markets. The US dollar lost ground after President Trump slapped stiff tariffs on Chinese products last week. However, fears of a global trading war which could spark a worldwide recession have eased this week, and the US dollar is higher, as investor risk appetite has improved. This follows the Chinese decision to file applications with the World Trade Organization regarding the tariffs, a move which could lead to an amicable resolution of the tariff spat between the two largest economies in the world.

GBP/USD Fundamentals

 Tuesday (March 27)

• 4:30 British FPC Minutes
• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.1%. Actual 6.4%
• 10:00 US CB Consumer Confidence. Estimate 131.2. Actual 127.7
• 10:00 US Richmond Manufacturing Index. Estimate 23. Actual 15
• 11:00 US FOMC Raphael Bostic Speaks

 Wednesday (March 28)

• 6:00 British CBI Realized Sales. Estimate 7
• 8:30 US Final GDP. Estimate 2.7%
• 8:30 US Final GDP Price Index. Estimate 2.3%
• 8:30 US Goods Trade Balance. Estimate -74.1B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.6%
• 10:00 US Pending Home Sales. Estimate 2.1%
• 10:30 US Crude Oil Inventories
• 12:00 US FOMC Member Raphael Bostic Speaks
• 19:01 British GfK Consumer Confidence. Estimate -10

*All release times are GMT

*Key events are in bold

GBP/USD for Tuesday, March 27, 2018

GBP/USD March 27 at 11:45 EDT

Open: 1.4231 High: 1.4245 Low: 1.4067 Close: 1.4162

GBP/USD Technical

GBP/USD was flat in the Asian session. The pair posted strong losses in European trade but has recovered some of these gains in the North American session

• 1.4128 was tested earlier in resistance and is a weak line
• 1.4227 is the next resistance line
• Current range: 1.4128 to 1.4227

Further levels in both directions:

• Below: 1.4128, 1.4010 and 1.3901
• Above: 1.4227, 1.4345, 1.4452 and 1.4518

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Tuesday session. Currently, long and short positions are evenly split, indicative of a lack of trader bias towards GBP/USD.

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.