GBP/USD – Pound Jumps on Bullish UK Retail Sales Report, Weak US Jobless Claims

GBP/USD has posted considerable gains in the Thursday session, as the pair has climbed to 2-week highs. In the North American session, GBP/USD is trading at 1.2550. On the release front, British CBI Realized Sales rebounded in February with a reading of 9 points. In the US, unemployment claims rose to 244 thousand, slightly above the estimate of 242 thousand. On Friday, the US there are two key events – New Home Sales and UoM Consumer Sentiment.

Market response to the Federal Reserve’s minutes has been muted. There were no surprises in the minutes, which were slightly dovish in tone. The key statement in the minutes was that a rate hike “fairly soon” could be appropriate in order to head off an overheated economy. The minutes indicated that Fed policymakers remain confident that the central bank will raise rates gradually, given the strong performance of the US economy. At the same time, the minutes noted uncertainty about President Trump’s fiscal stimulus plan but little concern over the risk of inflation. So when can we expect a rate hike? Although pressure is slowly building towards a move by the Fed, there does not appear a sense of urgency to raise rates at the next meeting in March. According to the CME Group, the odds of a March hike are only at 17%, while the likelihood of a hike in either May or June stands above 40%.

Speculation continues as to the Bank of England’s monetary plans. Despite uncertainty over Britain’s vote to leave the EU, the British economy continues to outpace expectations. Still, BoE Governor Mark Carney continues to warn that Brexit will take a toll on the economy, and his cautious stance was echoed by BoE Chief Economist Andy Haldane earlier this week. Haldane warned that a sharp increase in market expectations for an interest rate could hurt the “fragile” economy. Haldane expressed support for Carney’s neutral stance over interest rate movement. Although inflation levels have risen and are close to the BoE’s target of 2 percent, Carney has signaled that the BoE is in no rush to raise interest rates. Higher rates would boost the weak British pound, which has dropped a whopping 17 percent since the Brexit vote back in June.

U.S Claims Point to Strong Job’s Market

GBP/USD Fundamentals

Thursday (February 23)

• 5:34 British 10-y Bond Auction. Actual 1.18%
• 6:00 British CBI Realized Sales. Estimate 5 points. Actual 9 points
• 7:00 US Treasury Secretary Steven Mnuchin Speaks
• 8:30 US Unemployment Claims. Estimate 242K. Actual 244K
• 9:00 US HPI. Estimate 0.4%. Actual 0.4%
• 10:30 US Natural Gas Storage. Estimate -86B
• 11:00 US Crude Oil Inventories. Estimate 3.4M
• 13:00 US FOMC Member Robert Kaplan Speech

Upcoming Key Events

Friday (February 24)

• 10:00 US New Home Sales. Estimate 575K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 96.1

*All release times are GMT

*Key events are in bold

GBP/USD for Thursday, February 23, 2017

GBP/USD February 23 at 10:45 EST

Open: 1.2451 High: 1.2561 Low: 1.2426 Close: 1.2550

GBP/USD Technical

• GBP/USD showed little movement in the Asian session. The pair posted gains in the European session and the upward swing continues in  North American trade
• 1.2471 is providing support
• 1.2579 is under pressure in resistance

Further levels in both directions:

• Below: 1.2471, 1.2351, 1.2272 and 1.2143
• Above: 1.2579, 1.2674 and 1.2775
• Current range: 1.2471 to 1.2579

OANDA’s Open Positions Ratio

GBP/USD ratio remains unchanged this week. Currently, long positions have a majority (58%), indicative of trader bias towards GBP/USD continuing to move upwards.

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.