GBP/USD – Edges Lower as US Manufacturing Numbers Disappoint

 GBP/USD has posted modest losses to start the new trading week, as the pair trades in the low-1.53 range early in the North American session. US data continues to falter, as the Empire State Manufacturing Index was way below the estimate. The poor numbers come on the heel of a disastrous Friday, when all four US key events missed their estimates. In the UK, Rightmove HPI gained 2.1%, up from 1.7% the month before. On Tuesday, the UK releases its first key event of the week, with the publication of CPI.

The US released a host of data on Friday, and the grim news continued. After a solid Unemployment Claims reading on Thursday, there was hope that the US would rebound from a string of dismal releases, but the wheels just fell off the cart on Friday. Core Retail Sales and Retail Sales both declined by 0.4%. PPI dropped 0.6%, and UoM Consumer Sentiment wrapped up an awful week. The key consumer indicator came in at 72.3 points, way off the estimate of 79.1 points. The continuing weak numbers are bound to raise serious concerns about the extent of the recovery, as the US has churned out weak numbers since late March. 

The Cyprus bailout agreement has been signed, but is the crisis really over? Eurogroup finance ministers met last Friday and approved a EUR 10 billion loan to Cyprus. Under the agreement, Cyprus will have to kick in EUR13 billion. Back in March, Cyprus was only supposed to add another EUR 7 billion. However, the deal collapsed after Cyprus balked at taxing every bank deposit in the country following a huge outcry on the island. Cyprus president Nicos Anastasiades said he will ask the EU for more help, but it not clear if Cyprus is asking additional bailout funds or funds in another form. The bailout agreement calls for huge taxes on deposits over EUR 100,000. Deposits in the Bank of Cyprus will lose between 37.5% and 60%, while depositors in Laiki Bank could lose up to 80%. Under the bailout agreement, Cyprus must restructure its banking sector and impose austerity measures. Analysts estimate that the country’s GDP will shrink by 13% in 2013 and 2014.

 

GBP/USD for Monday, April 15, 2013

Forex Rate Graph 15/1/13

GBP/USD April 15 at 14:00 GMT

1.5324 H: 1.5385 L: 1.5305

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5138 1.5203 1.5309 1.5392 1.5475 1.5524

 

The pound has lost ground to start the week. The pair is facing resistance at 1.5392. This is followed by resistance at 1.5475 . This line has held firm since mid-February. On the downside, 1.5309 is providing support. This is a weak line, and could be tested if the pound continues to lose ground. There is stronger support at 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, 1.5475, 1.5524 and 1.5630

 

OANDA’s Open Positions Ratios

The GBP/USD ratio is pointing to movement in favor of short positions. This is reflected in the current movement of the pair, as the pound has started the week with losses against the US dollar. Long positions still retain a majority in the ratio, indicative of trader sentiment having a bias towards the pair reversing direction and moving upwards.

The pound has lost some ground against the US dollar, as the pair trades in the low-1.53 range. US numbers have been sputtering, and the market will get a look at Building Permits and Core CPI, both of which are market-movers. As well, the UK releases CPI. So we could well see some volatility from the pair on Tuesday. Until then, we’re unlikely to see any dramatic moves by the pair.

 

GBP/USD Fundamentals

  • 12:30 US Empire State Manufacturing Index. Estimate 7.2 points
  • 13:00 US TIC Long-Term Purchases. Estimate 41.3B. Actual -17.8B
  • 14:00 US NAHB Housing Market Index. Estimate 45 points

 

*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.