GBP/USD – Steady as Key US Releases Post Declines

GBP/USD is trading quietly, as the markets digest the release of key US data earlier on Friday. Late in the European session, the pair was steady, as the pair was trading in the mid-1.53 range. After a quiet week in the US, the markets were eagerly awaiting Friday’s major releases. So far, the results of been a big disappointment, as Core Retail Sales, Retail Sales and PPI all fell below expectations. US Consumer Sentiment will be released later today, and US Federal Reserve head Bernard Bernanke will address a conference in Washington. In the UK, CB Leading Index posted a gain of 0.4% for the second straight month.

After a solid US Unemployment Claims release, expectations were high that Friday’s key releases would be positive. However, this was not to be as US retail sales and inflation numbers missed their estimates. Core Retail Sales fell from 1.0% to -0.4%, below the estimate of -0.1%. Retail Sales was a similar story, dropping from 1.1% to -0.4%. PPI, a key consumer inflation indicator, fared no better. The index dropped from 0.7% to -0.6%, well below the estimate of -0.2%. About the only good news was Core PPI, a secondary-tier indicator, which gained 0.2%, matching the forecast. U0M Consumer Sentiment will be released later in the day. The markets are expecting a strong improvement from the previous reading, with an estimate of 79.1 points. If the indicator can meet or  beat the forecast, it will salvage what has so far been a very disappointing day.

The Federal Open Market Committee released its meeting minutes on Wednesday, and the most exciting thing about the release was that it was leaked several hours ahead of schedule. The Federal Reserve was not amused, and has ordered an investigation into the matter. The minutes themselves turned out to be a non-event, with policymakers divided as to the extent and duration of the current round of QE. Some members wanted to wind down the program in the middle of 2013, while others felt it was more appropriate to wait until the end of the year. There was also discussion about whether to decrease the amount of asset 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 the QE program had the meeting taken place in April rather than March. Meanwhile QE continues full stream ahead, as the Fed continues to purchase $85 billion in assets each month.

Back in Europe, the Eurogroup finance ministers will be gathering in Dublin on Friday. Although the Cyprus bailout has been making headlines in recent weeks, other Eurozone members have received bailouts and their repayment of loans must be monitored. These include Ireland and Portugal, and the Eurogroup will be discussing whether these two countries should  be granted an extension on their loan repayments. The Cyprus bailout will also be on the agenda. The latest development is that the Cyprus government has confirmed that the cost of the bailout has ballooned to EUR 23 billion.

 

 GBP/USD for Friday, April 12, 2013

Forex Rate Graph 15/1/13

GBP/USD April 12 at 13:15 GMT

1.5370 H: 1.5410 L: 1.5345

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5138 1.5203 1.5309 1.5392 1.5519 1.5633

 

GBP/USD is steady, as it trades in the 1.5370 range. The pair is facing resistance at 1.5392. This is a weak line, and could see further activity today. This is followed by strong resistance at 1.5519. On the downside, the pair is receiving support at 1.5309. This line continues to protect the 1.53 level. The next line of support is 1.5203.

  • Current range: 1.5309 to 1.5392.

 

Further levels in both directions:

  • Below: 1.5309, 1.5203, 1.5138, 1.5053 and 1.4988
  • Above: 1.5392, 1.5519, 1.5633 and 1.5812

 

OANDA’s Open Positions Ratios

The GBP/USD ratio is not showing much movement in the Friday session. This is consistent with what we are seeing from the pair, which is steady, and has not been able to sustain momentum in either direction. This is reflected in the current movement of the pair, which has been steady, unable to sustain momentum in either direction. Long positions enjoy a sizeable majority, indicating that trader sentiment is strongly biased in favor of the British pound improving against the US dollar.

GBP/USD has not reacted to Friday’s US releases, but that could well change in the North American session. The weak US numbers could sour market sentiment and hurt the dollar, so we could see some upward movement from the pair before the weekend.

 

GBP/USD Fundamentals

  • 9:00 British CB Leading Index. Actual 0.4%.
  • 12:30 US Core Retail Sales. Estimate. -0.1%. Actual -0.4%.
  • 12:30 US PPI. Exp. -0.2%. Actual -0.6%.
  • 12:30 US Retail Sales. Exp. 0.0%. Actual -0.4%.
  • 12:30 US Core PPI. Exp. 0.2%. Actual 0.2%.
  • 12:45 US FOMC Member Eric Rosengren Speaks.
  • 13:55 US Preliminary UoM Consumer Sentiment. Exp. 79.1 points.
  • 13:55 US Preliminary UoM Inflation Expectations.
  • 14:00 US Business Inventories. Exp. 0.4%.
  • 16:30 Fed Chairman Bernard Bernanke Speaks.

 

*Key releases are highlighted in bold

*All release times are GMT

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.