MarketPulse | Aug 31, 2016 09:04AM ET
GBP/USD posted gains but has then retracted on Wednesday, as the pair trades slightly below the 1.31 line. On the release front, British GfK Consumer Confidence came in at -7 points, within expectations.
In the US, we’ll get a look at two key indicators – ADP Nonfarm Employment Change and Pending Home Sales. On Thursday, the US releases unemployment claims and the ISM Manufacturing PMI. The UK will publish Manufacturing PMI.
British consumer confidence showed improvement in August and even beat the market forecast. The reading of minus -7 points to pessimism, but marked a sharp improvement over the July reading of minus -12.
The British consumer continues to spend despite concerns over Brexit, as underscored by strong readings from CBI Realized Sales and retail sales. Recent inflation and employment numbers have also been solid, and the economy’s next test is the Manufacturing and Construction PMI reports.
The US consumer remains optimistic about the US economy, according to a key consumer confidence survey. CB Consumer confidence jumped to 1o1.1 points in August, above the forecast of 99.7 points. It marked the indicator’s highest level since September 2015.
Recent consumer sentiment indicators have been steady, and if the optimism extends to actual consumer spending, we could see the odds of a rate hike in September or December, which have dramatically increased in the past week, continue to move upwards.
The markets are again abuzz over a possible rate increase in 2016, following an upbeat speech from Fed chair Janet Yellen on Friday at the Jackson Hole summit. Yellen’s message to the markets was refreshingly clear, as she said that the case for a rate increase had “strengthened in recent months”. Yellen noted that the key economic indicators were performing well – the labor market was approaching maximum employment, inflation was steady, and consumer spending remained solid.
Still, Yellen did not provide any timeline on a rate hike nor did she spell out what the Fed wants to see before pressing the rate trigger. On Friday, Fed members Dennis Lockhart and Stanley Fischer both came out in favor of two rate hikes in 2016, and these comments helped the dollar record broad gains on Friday.
The Fed’s stance has raised the odds of a rate move according to the CME Group FedWatch tool, with a September hike priced at 30% in September and 57% for a December hike.
However, given that any move by the Fed will be data-dependent, US numbers ahead of the Fed policy meeting on September 21 could significantly change the rate outlook.
GBP/USD Fundamentals
Tuesday (August 30)
Wednesday (August 31)
Thursday (September 1)
*All release times are EDT
* Key events are in bold
GBP/USD for Wednesday, August 31, 2016
GBP/USD August 31 at 9:00 GMT
Open: 1.3089 High: 1.3158 Low: 1.3063 Close: 1.3091
GBP/USD Technical
S1 | S2 | S1 | R1 | R2 | R3 |
1.2849 | 1.2938 | 1.3064 | 1.3142 | 1.3219 | 1.3327 |
Further levels in both directions:
OANDA’s Open Positions Ratio
GBP/USD ratio has posted small gains on Wednesday. Long positions have a majority (55%), indicative of trader bias towards GBP/USD breaking out and moving upwards.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.