GBP/USD – Pound Hits 2-Week High, Key Manufacturing Report Next

The British pound has recorded gains for a third straight session. In Tuesday trade, GBP/USD is trading at 1.4160, up 0.26% on the day. On the release front, the sole British event was a speech from BoE Chief Economist Ande Haldane. In the US, inflation indicators beat the estimates. PPI edged up to 0.3%, beating the estimate of 0.1%. Core PPI also improved to 0.3%, edging above the estimate of 0.1%. On Wednesday, the UK releases Manufacturing Production and the US publishes consumer inflation reports.

Investor risk appetite is up after Chinese President Xi Jimping sent out a conciliatory message earlier on Tuesday. Xi was speaking at a development conference in China, and promised to lower tariffs on vehicle imports into China. This has been a major sticking point between the US and China, with President Trump complaining that China has a 25% tariff on US vehicle imports, yet the US only charges 2.5% on Chinese vehicles. Although China has previously declared that it would reduce the tariffs on vehicles, the markets were looking for some positive news, as the trade battle between the two largest economies in the world has shaken the markets in recent weeks. Xi added that China was looking to solve issues through dialogue rather than confrontation, and the markets are hoping that the US and China can avert a trade war, which could drag down the global economy.

What can we expect from the Bank of England? The bank does not meet for a rate meeting until next month, but there is support for a quarter-point rate increase. On Tuesday, BoE member Ian McCafferty urged the bank not to delay in raising rates, and other policymakers support this view. One strong reason in favor of a rate hike is that inflation remains around 3%, well above the 2% target. However, the lukewarm British economy and the dark cloud of Brexit are key reasons why Governor Mark Carney has not been enthusiastic about raising rates. As things currently stand, a quarter-point rate hike seems likely at the May meeting.

GBP/USD Fundamentals

 Tuesday (April 10)

• 5:00 BOE Chief Economist Andy Haldane Speaks
• 6:00 US NFIB Small Business Index. Estimate 107.0. Actual 104.7
• 8:30 US PPI. Estimate 0.1%. Actual 0.3%
• 8:30 US Core PPI. Estimate 0.2%. Actual 0.2%
• 10:00 US Final Wholesale Inventories. Estimate 0.8%. Actual 1.0%

Wednesday (April 11)

• 4:30 British Manufacturing Production. Estimate 0.2%
• 4:30 British Goods Trade Balance. Estimate -12.0B
• 8:30 US CPI. Estimate 0.0%
• 8:30 US Core CPI. Estimate 0.2%
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

GBP/USD for Tuesday, April 10, 2018

GBP/USD April 10 at 12:00 EDT

Open: 1.4130 High: 1.4188 Low: 1.4120 Close: 1.4167

GBP/USD Technical

GBP/USD inched higher in the Asian session but and added slight gains in European trade. The pair is steady in the North American session

• 1.4128 is providing support
• 1.4227 is the next resistance line
• Current range: 1.4128 to 1.4227

Further levels in both directions:

• Below: 1.4128, 1.4010, 1.3901 and 1.3793
• Above: 1.4227, 1.4345 and 1.4452

OANDA’s Open Positions Ratio

In the Tuesday session, GBP/USD ratio is showing long and short positions close to evenly split. This is indicative of a lack of trader bias as to what direction GBP/USD will take next.

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.