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GBP/USD – Pound in Holding Pattern Ahead of Retail Sales, BoE

British numbers have not looked impressive this week, as employment and inflation numbers have been lukewarm. The pound could show some stronger movement later in the day, as the U.K. releases retail sales (9:30 GMT) and the Bank of England rate decision (12:00 GMT).
Kenny Fisher
Bank of England

GBP/USD has posted slight gains in Thursday trade, recovering the losses seen on Wednesday. Currently, the pair is trading at 1.3109, up 0.19% on the day.

British Job, CPI Data Point to Weakness

With Christmas just around the corner, it continues to be a busy week for British indicators. Consumer inflation remained steady at 1.5%, edging above the forecast of 1.4 percent. Still, this remains well off the BoE inflation target of 2%. These past two readings mark the lowest monthly inflation levels since November 2016, as economic conditions in the U.K. remain subdued. Thursday promises to be busy, with the release of retail sales and the Bank of England rate decision. Analysts expect retail sales to rebound in November with a gain of  0.3%, while the BoE is expected to stay on the sidelines and hold interest rates at 0.75 percent.

The tepid inflation data came on the heels of disappointing employment data, which was weaker than expected. Wage growth slowed to 3.2% in October, down from 3.4% in the previous release. This marked the weakest gain since April. Unemployment claims dropped to 28.8 thousand, compared to 33.0 thousand a month earlier. Still, this was much higher than the forecast of 21.2 thousand.

Technical Analysis

GBP/USD appears to have leveled off, after sustaining sharp losses earlier in the week. There is resistance at the round number of 1.3200, followed closely by resistance at 1.3225. On the downside, 1.3100 remains an immediate support line – this line was tested earlier on Thursday and the pair could break below it before the week is over. Below, we find support at 1.3050.

GBP/USD 1-Day Chart

 

Pacific Currencies – Summary

USD/CNY

USD/CNY is trading sideways on Thursday. The pair continues to hover at the 7.00 level, which has psychological significance. Currently, the pair is trading at 7.0046, up 0.07% on the day. With the yuan showing little inclination to make a move in either direction, I would expect more of the same throughout the Thursday session.

AUD/USD

Aussie Gains on Strong Job Numbers

AUD/USD has recorded its highest one-day gains in a week. Currently, the pair is trading at 0.6879, up 0.34% on the day. The Aussie flexed some muscle courtesy of strong employment data. The economy created a 39.9 thousand jobs in November, bouncing back from a decline in October, and crushing the forecast of 14.5 thousand. As well, the unemployment rate ticked lower to 5.2%, down from 5.3 percent a month earlier.

NZD/USD

Kiwi Yawns Despite Strong GDP

NZD/USD is steady in Thursday trade. Currently, the pair is trading at 0.6568, down 0.02% on the day. The pair shrugged of a strong New Zealand GDP release for Q3, which came in at 0.7 percent. This beat the estimate of 0.5 percent. The trade balance deficit narrowed to NZ$753 million. This was a higher deficit than expected, but was the lowest figure in four months.

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