By Kenny Fisher
The British pound has posted considerable losses in the Friday session. In North American trade, the pair is trading at 1.3150, down 0.42% on the day. The pair is at its lowest level since July 3. It's a quiet end to the week, with no British data releases. In the US, the key event is UoM Consumer Sentiment, which is expected to dip to 98.1 points.
With the Brexit talks in disarray, both sides are making contingency plans for a 'hard Brexit', in the event that the parties fail to reach an agreement. On Thursday, the British government released a white paper, which is a blueprint for trade arrangements with EU when Britain leaves the club in March 2019. The proposal suggests that the UK and the EU will enter into an "associate agreement", which maintains current agreements with regards to goods but not services. This would hurt the London financial sector, which is already facing the loss of hundreds of financial jobs from London to the continent. Hardliner Brexiters oppose the white paper, which they argue does not give Britain full control over trade policy. Will the Europeans buy what May is selling? EU policymakers are reviewing the white paper and if it is rejected, investors could get panicky and send the pound lower.
Federal Reserve Chair Jerome Powell gave the US economy a solid report card on Thursday. In a radio interview, Powell said that the economy is "in a really good place", pointing to President Trump's massive tax cut scheme and increased spending as key factors in boosting economic growth. Powell did not address monetary policy and said he was uncertain as to the effects of the current trade disputes which has embroiled the US and its trading partners. The Fed will likely press the rate trigger in the second half of the year, but it is an open question as to whether we'll see one hike over the next six months. The Fed is projecting growth of 2.8% in 2018, compared to 2.3% in 2017. Powell will be in the spotlight next week when he appears for his semi-annual testimony before Congress.
Friday (July 13)
- 7:30 BoE Deputy Governor Jon Cunliffe Speaks
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.1
- 10:00 US Preliminary UoM Inflation Expectations
- 11:00 US Fed Monetary Policy Report
Saturday (July 14)
- Tentative - British NIESR GDP Estimate
*All release times are DST
*Key events are in bold
GBP/USD for Friday, July 13, 2018
GBP/USD July 13 at 8:00 DST
Open: 1.3205 High: 1.3208 Low: 1.3103 Close: 1.3150
GBP/USD edged lower in the Asian session and continues to lose ground in European trade
- 1.3186 was tested earlier in support
- 1.3263 is the next resistance line
- Current range: 1.3186 to 1.3263
Further levels in both directions:
- Below: 1.3088, 1.2996 and 1.2905
- Above: 1.3186, 1.3263, 1.3494 and 1.3613
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