GBP/USD – Struggling Pound Dips Below 1.51 Line

GBP/USD has lost ground in Monday trading, as the pair has dipped below the 1.51 early in the North American session. The markets are closed in both the US and UK for a holiday, we are seeing some activity from the pair, which continues to lose ground.

After posting strong employment and housing numbers, the US wrapped up last week with strong manufacturing data. Core Durable Goods Orders jumped at 1.3%, easily beating the estimate of 0.6%. Durable Goods Orders kept pace with a 3.3% increase, well above the estimate of 1.6%. The markets were pleased that both indicators bounced back from declines in the previous month. We’ll get another look at the confidence level of US consumers, with the release of CB Consumer Confidence on Tuesday.

The US Federal Reserve was in the spotlight last week as Bernard Bernanke testified before a Congressional committee. Bernanke initially stated that tightening monetary policy could hurt the US recovery. However, he later said that a decision to scale back QE could be taken in the “next few meetings” if the US economy improves. The bottom line? Bernanke’s comments still leave the markets guessing as to the Fed’s plans regarding the current quantitative easing (QE) program. The Fed is not making any changes to its monetary policy, but that could change if the US economy improves and unemployment falls.

Almost overshadowed by Bernanke’s remarks in Congress was the release of the minutes from the FOMC’s last policy meeting. The minutes indicate that the US recovery will have to gain more traction before the Fed winds down QE. Policy members were split, as some suggested scaling back QE in June (at the next policy meeting), while others wanted to increase QE, given the weak inflation readings we are seeing. It should be noted that the FOMC minutes relate to a meeting which took place at the beginning of May, in contrast to the fresh testimony of Bernanke on Wednesday.

 

GBP/USD for Monday, May 27, 2013

Forex Rate Graph 15/1/13

GBP/USD May 27 at 15:20 GMT

GBP/USD 1.5094 H: 1.5156 L: 1.5092

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.4873 1.5000 1.5047 1.5111 1.5203 1.5309

 

GBP/USD has lost ground as we start off the new trading week. The pair is testing the 1.51 line, as the pound continues to struggle. GBP/USD is facing resistance at 1.5111. This line has already been breached today, and could see further activity. This is followed by resistance at 1.5203. On the downside, the pair continues to receive support at 1.5047. The next support line is at the round number of 1.50.

Current range: 1.5047 to 1.5111

 

Further levels in both directions:

  • Below: 1.5047, 1.5000, 1.4873 and 1.4781
  • Above: 1.5111, 1.5203, 1.5309, 1.5432, and 1.5524

 

OANDA’s Open Positions Ratio

The GBP/USD ratio is not showing much activity. We are seeing some movement from the pair, as the pound’s downward trend continues. If GBP/USD continues to be active, we can expect the ratio to show movement as well.

Although the UK and US markets are closed, the pound continues to lose ground, and has dipped below the 1.51 level. We could see stronger movement on Tuesday, as the US releases key consumer confidence numbers.

 

GBP/USD Fundamentals

  • There are no releases out of the UK or US on Monday

 

 

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.