- The Sterling is settling into the year's lows as trade concerns and a Brexit-heavy FSR did little to encourage bulls back into the fold.
- Thursday's thin calendar for the GBP will see US GDP figures taking front-and-center in determining market direction heading into the late week.
The GBP/USD is set up for a new low in 2018, trading just above the 1.3100 key level following Wednesday's declines from a high of 1.3230 after comments from the Bank of England's Mark Carney failed to deliver a hawkish stance that many traders may have been hoping for.
The BoE dropped their latest Financial Stability Report (FSR) yesterday, which highlighted the domestic risks from a disorderly Brexit scenario, and although the central bank is confident in the UK's ability to weather such an event, traders were sharply reminded of the rising probability of such an event, and the Sterling slumped following the FSR, driven further by Carney's comments, who pointed out the clear risk to the UK's economy from rising global trade tensions, namely the ongoing trade spat between US President Trump and China, as well as trade difficulties between the US and key allies. The double hit of cautious news was too much for GBP traders, and the GBP/USD backslid a full penny through the rest of Wednesday's trading.
Thursday is a decidedly quiet showing for the Pound, with the only notable scheduled event being a speech from the BoE's Monetary Policy Committee member Andy Haldane at 13:30 GMT, who will be giving a speech on productivity growth at the Academy of Social Sciences Annual Lecture in London.
On the US side, GDP figures for Q1 will be coming in at 12:30 GMT, and the annualized quarterly GDP is expected to remain steady at 2.2%. Economic growth within the US has been strong for 2018, and traders are expecting to see another two more rate hikes from the US Federal Reserve this year, and a positive reading for key figures will certainly help keep the Fed on track, but a sudden contraction in figures like the GDP could see expectations diminish rapidly.
GBP/USD Levels to watch
2018's current low of 1.3101 has very large target painted on its back today, and as FXStreet's Chief Analyst Valeria Bednarik noted, "the GBP/USD pair is at risk of breaking lower, according to intraday technical readings, given that in the 4 hours chart, technical indicators maintain their bearish slopes, despite the RSI is currently at 29, indicating the strength of sellers. In the same chart, the latest recovery stalled well below a bearish 200 EMA, while today's decline put the price far below a now bearish 20 SMA, also signaling further declines ahead, particularly on a break below the mentioned yearly low."
Support levels: 1.3100 1.3065 1.3020
Resistance levels: 1.3170 1.3200 1.3245
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.