GBP/USD: Pound Ticks Upwards, U.S. Housing Report Next

 | Aug 24, 2016 06:32AM ET

The British pound has edged above the 1.32 line on Wednesday, continuing the upward movement which has marked GBP/USD this week. The pair is currently trading at 1.3220. On the release front, British BBA Mortgage Approvals dropped to 37.5 thousand, short of expectations. In the US, today’s highlight is Existing Home Sales, with the indicator expected to dip to 5.52 million. On Thursday, the US releases two key events – Core Durable Goods report and Unemployment Claims.

The shock Brexit vote in June shook up the financial markets and sent the pound plunging to 30-year lows. Ever since then, there have been widespread concerns that “hard” UK data in the third quarter would point to a sputtering British economy, possibly even point a recession. However, July releases across sectors looked sharp, as inflation, employment and retail sales all beat their estimates. The pound responded with strong gains last week, climbing 1.2 percent. The rally has continued this week, as the pound has crossed above the 1.32 line on Wednesday and is at its highest level since August 4. On Friday, the UK releases GDP Second Estimate, a key economic report card for the economy. If the indicator matches or beats the forecast, the pound could gain more ground.

With the upcoming Jackson Hole meeting in focus,Fed was close to its aims of a full labor market and the inflation target of 2 percent . The latter claim sounds a bit optimistic, as US inflation levels have consistently been closer to zero than the 2 percent level. Janet Yellen will likely address the inflation issue at Jackson Hole, as inflation levels will be a crucial factor in whether the Fed pulls the rate trigger before 2017. The odds of a September hike are only about 12%, while the likelihood of a December move is around 40%.

GBP/USD Fundamentals

Wednesday (August 24)

  • 4:30 British BBA Mortgage Approvals. Estimate 38.5K. Actual 37.7K
  • 9:00 US HPI. Estimate 0.3%
  • 10:00 US Existing Home Sales. Estimate 5.52M
  • 10:30 US Crude Oil Inventories. Estimate -0.5M

Thursday (August 25)

  • 8:30 US Unemployment Claims. Estimate 265K
  • 8:30 US Core Durable Goods Orders. Estimate 0.4%
  • All Day – Jackson Hole Symposium

*All release times are EDT

* Key events are in bold

GBP/USD for Wednesday, August 24, 2016