Pound Jumps To 11-Week High
Kenny Fisher | Apr 16, 2018 01:59PM ET
The British pound has started the week with strong gains, as last week’s rally has continued in the Monday session. In North American trade, GBP/USD is trading at 1.4329, up 0.65% on the day. On the release front, the British CB Leading Index declined 0.4%. In the US, Core Retail Sales remained unchanged at 0.2%, matching the forecast. Retail Sales impressed with a gain of 0.6%, above the estimate of 0.4%. This followed two straight declines. On Tuesday, the UK releases wage growth and unemployment claims and the US publishes Building Permits.
After a week of uncertainty, which roiled the markets, US President Trump made good on his word as a US-led strike destroyed several chemical installations in Syria on Saturday. Predictably, Syria and Russia strongly condemned the attack, but are unlikely to retaliate despite the rhetoric. The markets had already priced in an attack, and are hopeful that Trump’s declaration of “mission accomplished” means that things will remain relatively quiet in Syria. However, further chemical attacks by the Syrian regime could trigger a response from the US and its allies, which could result in volatility in the markets.
It continues to be blue skies for the British pound, which continues to gain ground against the US dollar. GBP/USD has surged an impressive 5.4% since the start of the year and is at its highest level since late January. A stronger currency has helped ease inflation concerns to a degree, although the inflation rate is still close to 3%, well above the BoE target of 2%. As for rate policy, bank policymakers do not meet for a rate meeting until May, but there appears to be strong support for a quarter-point rate increase. Last week, a key 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
Sunday (April 15)
- 19:01 British Rightmove HPI. Actual 0.4%
Monday (April 16)
- 8:30 US Core Retail Sales. Estimate 0.2%. Actual 0.2%
- 8:30 US Retail Sales. Estimate 0.4%. Actual 0.6%
- 8:30 US Empire State Manufacturing Index. Estimate 19.8. Actual 15.8
- 9:30 British CB Leading Index. Actual -0.4%
- 10:00 US Business Inventories. Estimate 0.6%. Actual 0.6%
- 10:00 US NAHB Housing Market Index. Estimate 71. Actual 69
- 13:15 US FOMC Member Raphael Bostic Speaks
- 16:00 US TIC Long-Term Purchases
Get The News You Want
Tuesday (April 17)
- 4:30 British Average Earnings Index. Estimate 3.0%
- 4:30 British Claimant Count Change. Estimate 13.3K
- 4:30 British Unemployment Rate. Estimate 4.3%
- 8:30 US Building Permits. Estimate 1.33M
- 8:30 US Housing Starts. Estimate 1.27M
*All release times are GMT
*Key events are in bold
GBP/USD for Monday, April 16, 2018
GBP/USD April 16 at 12:45 EDT
Open: 1.4236 High: 1.4339 Low: 1.4230 Close: 1.4329
GBP/USD Technicals
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.4010 | 1.4128 | 1.4227 | 1.4345 | 1.4452 | 1.4565 |
GBP/USD edged higher in the Asian session. The pair posted stronger gains in European trade and is flat in the North American session
- 1.4227 has switched to a support role following gains by GBP/USD on Monday
- 1.4345 is a weak resistance line
- Current range: 1.4227 to 1.4345
Further levels in both directions:
- Below: 1.4227, 1.4128, 1.4010, 1.3901
- Above: 1.4345, 1.4452 and 1.4565
OANDA’s Open Positions Ratio
GBP/USD ratio continues to show gains in short positions. Currently, short positions have a majority (61%), indicative of trader bias towards GBP/USD reversing directions and moving lower.
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.