The British pound continues to post losses against the US dollar in Friday trading. GBP/USD has lost about a cent this week, as the pair trades just under the 1.55 line in Friday’s European session. Taking a look at economic releases on Friday, British Net Lending to Individuals fell well short of the estimate, while Nationwide HPI matched the estimate. In the US, Core PCE Price Index and Personal Spending both posted weak gains and fell below their estimates. Later today, we’ll get a look at Chicago PMI and UoM Revised Consumer Sentiment.
On Thursday,US Preliminary GDP for Q2 looked good, posting a healthy gain of 2.5%. This was slightly above the Q1 reading of 2.4% and beat the estimate of 2.2%. Unemployment Claims dropped slightly to 331 thousand, just shy of the estimate of 330 thousand. With continuing speculation about when the Federal Reserve will ease up on QE, every employment release is being closely scrutinized by the markets. Strong employment numbers could result in the Fed starting to taper QE in September, which would boost the US dollar.
The markets reacted nervously this week as a US military strike against Syria appeared imminent. The US had declared that it would respond to a chemical attack, apparently by the Syrian government, which killed hundreds of civilians. However, there is now a strong possibility that a strike by the US could be postponed until mid-September. On Thursday, the British parliament voted by a narrow margin not to join any US attack on Syria, and other US allies do not want to take any action before the UN has a chance to review data collected by UN inspectors in Syria. This complicates President Obama’s attempts to solidify a coalition before taking military action.
In the UK, the financial markets were all ears as BOE head Mark Carney made his first public appearance since taking over the position in July. Carney said that the BOE is prepared to add stimulus if it is needed, in order to boost economic growth. As the new head of the BOE, Carney has introduced forward guidance, in which the BOE has communicated that it plans to keep the benchmark interest rate at a record low of 0.50% until 2016 at the earliest. Carney said that raising interest rates too early could choke off the recovery. However, many investors believe the BOE could raise rates much sooner, given the improving UK economy in Q2 and the strong likelihood of QE tapering by the US Federal Reserve. The markets have priced in an interest rate hike for early 2015 and it will be interesting to see how Carney responds to this move.
GBP/USD for Friday, August 30, 2013
GBP/USD August 30 at 13:30 GMT
GBP/USD 1.5490 H: 1.5528 L: 1.5477
- GBP/USD continues to lose ground in Friday trading. The pair touched a high of 1.5527 early in the European session but then retracted and has fallen below the 1.55 line. The pound remains under pressure in the North American session.
- The pair continues to face resistance at 1.5527. This is a weak line and could face pressure if the pound moves higher. Next, there is resistance at 1.5645.
- On the downside, the GBP/USD is receiving support at 1.5432. This is followed by a stronger support at 1.5309, which is protecting the 1.53 line.
- Current range: 1.5432 to 1.5527
Further levels in both directions:
- Below: 1.5432, 1.5309, 1.5203 and 1.5127.
- Above: 1.5527, 1.5645, 1.5756, 1.5877 and 1.6000
OANDA’s Open Positions Ratio
The GBP/USD ratio is continuing to show movement towards long positions in Friday trading. This is not reflected in the current movement of the pair, as the pound continues to lose ground against the US dollar. The ratio has a large majority of short positions, which reflects a strong bias in favor of the US dollar continuing to gain ground against the pound.
GBP/USD remains under pressure, and has dropped into 1.54 territory. With no major releases on Friday, we could see the pair trade close to the 1.55 line in the North American session.
- 6:00 British Nationwide HPI. Estimate 0.6%. Actual 0.6%.
- 8:30 British Net Lending to Individuals. Estimate 1.7B. Actual 1.3B.
- 8:30 British M4 Money Supply. Estimate 0.4%. Actual 0.6%.
- 8:30 British Mortgage Approvals. Estimate 59K. Actual 61K.
- 12:30 US Core PCE Price Index. Exp. 0.2%. Actual 0.1%.
- 12:30 US Personal Spending. Exp. 0.3%. Actual 0.1%.
- 12:30 US Personal Income. Exp. 0.3%. Actual 0.1%.
- 13:00 US FOMC Member James Bullard Speaks.
- 13:45 US Chicago PMI. Exp. 53.2 points.
- 13:55 US Revised UoM Consumer Sentiment. Exp. 81.2 points.
- 13:55 US Revised UoM Inflation Expectations.
*Key releases are highlighted in bold
*All release times are GMT