GBP/USD continues to trade quietly in Wednesday trading. The pair is trading slightly above the 1.53 level early in the North American session. There is not a lot of activity today as far as economic releases. Today’s major event was the release of the minutes of the most recent FOMC policy meeting. There are no scheduled British releases on Wednesday. It’s been a quiet week in the US, but we could see some activity from the pair on Thursday, as the US releases Unemployment Claims.
On Wednesday, the Federal Reserve released minutes of the Federal Open Market Committee’s March meeting. The minutes indicated that policymakers were divided as to the extent and duration of the current round of quantitative easing. Some members wanted to terminate the program in the middle of 2013, while others felt it was more appropriate to wait until the end of the year before stopping QE. There was also discussion about whether to decrease the amount of purchases immediately, or continue the present levels until the end of the year. The division in opinion reflects uncertainty over the extent of the US recovery and the health of the economy. With the US reeling off a host of poor releases throughout April, FOMC members might have had a different take on QE had the meeting taken place in April rather than March.
With concerns over the Cyprus bailout easing, trouble is now brewing in Portugal, where the country’s Constitutional Court struck down parts of an austerity package that the government announced earlier this year. These steps are part of a bailout package that Portugal received in 2011. The court struck down tax hikes worth about EUR5 billion euros. As a result, Portugal finds itself EUR 1.4 billion short in expected revenue. The economic picture is not good, as the economy shrunk 3.2% in 2012, and Portugal is behind in its deficit reduction targets. The legal tangles could aggravate the country’s difficult economic situation and lead to a full-blown crisis, which would be bad news for the Eurozone and the euro.
The US continues to churn out disappointing numbers, and every key release over the past two weeks has fallen below expectations. The data comes from across the economy – manufacturing, housing, consumer confidence and employment numbers have all missed their estimates. Employment numbers were dismal, and have helped the euro post impressive gains against the US dollar this week. Has the US recovery stalled? The US hasn’t released any major numbers so far this week. Unemployment Claims will be released on Thursday, and additional major releases are scheduled for Friday. If the US can turn things around and post some stronger numbers, we could see the dollar improve after losing ground to the euro.
GBP/USD for Wednesday, April 10, 2013
GBP/USD April 10 at 14:30 GMT
1.5314 H: 1.5341 L: 1.5250
GBP/USD continues to trade close to the 1.53 line. On the downside, there is pressure on 1.5309. The next support level is just above the 1.52 line, at 1.5203. On the upside, the pair is facing resistance at 1.5392. This is followed by 1.5461, which has held firm since mid-February.
- Current range: 1.5309 to 1.5392.
Further levels in both directions:
- Below: 1.5309, 1.5203, 1.5138, 1.5053, 1.4988
- Above: 1.5392, 1.5461, 1.5546, 1.5674
OANDA’s Open Positions Ratios
The GBP/USD ratio is pointing to a shift towards short positions. This is not currently reflected in the pair, which has not shown much movement. However, this activity in the ratio could be an indication that the pair will break out in a downward direction, with the US improving against the pound.
GBP/USD is treading softly on Wednesday, as it trades slightly above the 1.53 line. This could change as the US releases key employment numbers on Thursday, followed by additional key releases on Friday. Until then, we can expect the pair to continue to trade quietly.
- 13:00 US FOMC Meeting Minutes.
- 14:30 US Crude Oil Inventories. Estimate 1.6M. Actual 0.3M.
- 17:00 US 10-year Bond Auction.
- 18:00 US Federal Budget Balance. Estimate -110.3B.
*Key releases are highlighted in bold
*All release times are GMT