GBP/USD – Sharply Higher After Positive British GDP

USD/GBP shot up on Thursday after a positive British GDP report. The pair has gained about 160 points, and was trading in the mid-1.54 range early in the North American session. In the US, there was good news after Unemployment Claims came in below the estimate.

The pound got a big lift from the British GDP release earlier in the day. The key indicator made an impressive jump from -0.3% to 0.3%, beating the estimate of 0.1%. The markets were pleased with the results, and the pound hit its highest levels since February. There was also good news out of the US, as Unemployment Claims looked solid, in contrast to last week’s numbers. Claims dropped from 352 thousand to 339 thousand, beating the estimate of 352 thousand. The US has posted a long string of weak data, dating back to March, and the markets will want to see more solid numbers to be reassured that the US economy is on the right track. The markets will be hoping for more good news on Friday, with the release of Advanced GDP and UoM Consumer Sentiment.

 In Italy there was a positive development in the political crisis, as Enrico Letta was nominated as prime minister. Italy has been in a political impasse since inconclusive elections in February, and the impasse in the Eurozone’s third largest economy threatened to undermine the shaky Eurozone. Letta’s Democratic Party does not have a parliamentary majority, so he will have to form a coalition, which is no simple task. Letta is considered a moderate, is expected to try and form an alliance with former PM Silvio Berlusconi. Besides political difficulties, the Italian economy is in recession, and the present caretaker government hasn’t been able to continue with badly needed economic reforms. Once a new government is formed, it will need to quickly tackle the  country’s deep financial problems.

 

GBP/USD for Thursday, April 25, 2013

Forex Rate Graph 15/1/13

GBP/USD April 25 at 15:15 GMT

1.5440 H: 1.5480 L: 1.5274

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5203 1.5309 1.5392 1.5475 1.5524 1.5630

 

The pound has moved up sharply in Thursday trading.  The pair is facing resistance at 1.5475. Given the strong upward momentum we are seeing, this line could face pressure. There is a stronger resistance line at 1.5524. On the downside, 1.5392 is providing support. The next support line is 1.5309. This line has strengthened as the pair trades at higher levels.

  • Current range: 1.5392 to 1.5475

 

Further levels in both directions:

  • Below: 1.5392, 1.5309, 1.5203 and 1.5138
  • Above: 1.5475, 1.5524 and 1.5630

 

OANDA’s Open Positions Ratios

The GBP/USD ratio is back in action after a lull on Wednesday. We  are seeing movement towards short positions. This is not reflected in the current movement of the pair, as the pound is up sharply. However, it could be an early indication that the pound’s rally may soon be at an end, and the dollar will recoup some of today’s losses.

GBP/USD has looked rather dull this week, but that was certainly not the case on Thursday, as the pound shot up against the US dollar, barreling past the 1.54 line. With the US releasing strong employment numbers, we could see pound’s sharp ascent slow down.

 

GBP/USD Fundamentals

  • British Preliminary GDP. Estimate 0.1%. Actual 0.3%.
  • British Preliminary GDP. Estimate 0.0%. Actual 0.1%.
  • 12:30 US Unemployment Claims. Estimate 352K. Actual 339K.
  • 14:00 US Treasury Secretary Jack Lew Speaks.
  • 14:30 US Natural Gas Storage. Estimate 33B. Actual 30B.

 

*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.