GBP/USD – Little Movement after Recent Gains

The British pound is trading quietly on Friday, as GBP/USD continues to trade in the mid-1.60 range. The pound has looked very sharp, posting gains of close to 200 points since mid-week. In economic news, Friday’s highlight is the US Empire State Manufacturing Index. There are no British releases on Friday.

On Thursday, key releases out of the UK and the US were a disappointment. British Retail Sales looked sluggish, as the key consumer spending indicator posted a decline of -0.7%, compared to a gain of 0.6% the month before. This fell well short of the estimate of 0.0%. Over in the US, Unemployment Claims have been fairly steady over the past few weeks, but with speculation increasing about a possible December taper by the Federal Reserve, every employment release is under the market microscope. The indicator showed little change with a reading of 339 thousand, but this was above the estimate of 331 thousand. There wasn’t any relief from Thursday’s other key release, Trade Balance. The October deficit widened to -$41.8 billion, compared to -$38.8 billion in September. This was well above the estimate of -$38.7 billion.

Incoming Federal Reserve head Janet Yellen testified before the powerful Senate Banking Committee on Thursday. Yellen is a strong supporter of QE, and told the committee that the present level of asset purchases should continue until growth improves and unemployment falls. She said that the labor market and economy are  performing “far short of their potential”, but added that she expects inflation to remain below the Fed’s target of 2%. Yellen, who will become the first woman to head the Federal Reserve, takes over from Bernard Bernanke in January.

British employment numbers were impressive on Wednesday, and the pound responded with a sharp rise. Claimant Count Change continues to post strong declines, with the October reading of -41.7K repeating the September figure. This easily beat the estimate of -33.2K. No less significant was the Unemployment Rate, which edged lower to 7.6%, its lowest level since June 2009. This has increased speculation that the BOE may lower rates earlier than its forecast of 2016. The Bank has said that unemployment must fall below 7.0% before it will act, and investors increasingly are of the opinion that this threshold will be reached in 2015. The always-cautious BOE has acknowledged the improving UK economy, and in Wednesday’s inflation report, it referred to the economy as growing “robustly”.

GBP/USD for Friday, November 15, 2013

GBP/USD November 15 at 14:10 GMT

GBP/USD 1.6082 H: 1.6091 L: 1.6049

GBP/USD Technical

• GBP/USD continues to move higher in Friday trading. The pair touched a high of 1.6091 early in the European session.
• 1.6000 continues to provide support. This line has strengthened as the pair trades close to the 1.61 level. This is followed by support at 1.5877.
• On the upside, 1.6125 has weakened in resistance. Will the pound break through this line before the weekend? This line is followed by resistance at 1.6231, which was last tested in late October.
• Current range: 1.6000 to 1.6125.

Further levels in both directions:

• Below: 1.6000, 1.5877, 1.5756 and 1.5645 and 1.5537
• Above: 1.6125, 1.6231, 1.6300 and 1.6476

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to movement towards long positions. This is reflected in the current movement of the pair, as the pound continues to make inroads at the expense of the dollar. Short positions continue to dominate the open positions, reflecting a trader bias towards the US dollar reversing direction and moving to higher ground.

The pound continues to move higher against the US dollar. With no major US releases on Friday’s schedule, the pair’s movement in the North American session could be limited in scope.

GBP/USD Fundamentals

• 13:30 US Empire State Manufacturing Index. Exp. 5.2 points.
• 13:30 US Import Prices. Exp. -0.4%.
• 14:15 US Capacity Utilization Rate. Exp. 78.3%.
• 14:15 US Industrial Production. Exp. 0.1%.
• 15:00 US Wholesale Inventories. Exp. 0.5%.

*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.