GBP/USD – Pound Slips As British Housing Numbers Falter

The British pound has reversed directions in Monday trading. GBP/USD has dropped sharply and is trading in the mid-1.61 range in Monday’s North American session. In economic news, housing data in both the UK and US missed their estimates.

The new trading week started off on a disappointing note, as housing numbers in the UK and US did not meet expectations. In the UK, BBA Mortgage Approvals showed little movement, with 42.8 thousand new approvals in October. However, this was well short of the estimate of 45.2 thousand. Over in the US, the markets had anticipated good news from Pending Home Sales, with an estimate of 2.2%. However, the key indicator posted its fifth straight decline, with a reading of -0.6%. We’ll get another look at US housing numbers on Tuesday, including September data which was suspended due to the government shutdown.

There was positive news on the US employment front last week, as Unemployment Claims dropped to 323 thousand, a seven-week low. This was well below the estimate of 333 thousand. The strong figure will likely increase speculation as to when the Fed will step in and taper QE, although such a dramatic move is not considered likely before early 2014.

In the UK, we continue to see important economic indicators climb to multi-year highs. CBI Industrial Order Expectations jumped to 11 points in October, bouncing back from a weak reading of -4 points the month before. This was the manufacturing indicator’s best showing since 1995, and is another indication that the British economy continues to pick up steam. Meanwhile, Public Sector Net Borrowing posted a deficit of 6.4 billion pounds in October, an excellent improvement from 9.4 billion a month earlier. However, this was well off the estimate of 4.8 billion.

 

GBP/USD for Monday, November 25, 2013

Forex Rate Graph 21/1/13

GBP/USD November 25 at 16:25 GMT

GBP/USD 1.6144 H: 1.6236 L: 1.6136

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5877 1.6000 1.6125 1.6231 1.6300 1.6476

 

  • GBP/USD has posted sharp losses in Monday trading. The pair has been steadily losing ground since late in the European session.
  • 1.6125 continues to provide support. This line has come under pressure as GBP/USD has dropped sharply. This is followed by support at the key level of 1.6000.
  • On the upside, 1.6231 is providing strong resistance. The next resistance line is the round number of 1.6300. which has held steady since December 2012.
  • Current range: 1.6125 to 1.6231.

 

Further levels in both directions:

  • Below: 1.6125, 1.6000, 1.5877, 1.5756 and 1.5645
  • Above: 1.6231, 1.6300, 1.6476 and 1.6600

 

OANDA’s Open Positions Ratio

GBP/USD ratio continues to point to gains in short positions, a trend we have seen since the middle of last week. This is reflected in the pair’s current movement, as the pound continues to lose ground against the US dollar. Short positions continue to dominate the open positions, reflecting a trader bias towards the US dollar posting further gains.

The pound is having a rough day and has lost around 100 points against the dollar. Will the downward momentum continue? With no further releases during the day, we could see the pair settle down during the North American session.

 

GBP/USD Fundamentals

  • 9:30 British BBA Mortgage Approvals. Estimate 45.2K. Actual 42.8K.
  • 15:00 US Pending Home Sales. Estimate 2.2%. Actual -0.6%.

 

*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.