GBP/USD – Strong British GDP Boosts Pound

The British pound continues to look sharp and has posted more gains against the US dollar in Wednesday trading. The pound was buoyed by a solid Second Estimate GDP reading for Q3. The pound shrugged off a weak Realized Sales release, which posted another weak reading in October. Over in the US, Unemployment Claims looked sharp, but Core Durable Goods disappointed with a decline.

In the US, Unemployment Claims continues to look show improvement, as the key indicator dropped to 316 thousand, its lowest level in two months. This figure easily beat the estimate of 331 thousand. However, the news was not as good from the manufacturing sector, as Core Durable Goods Orders posted a drop of 0.1% for the third month running. The key indicator has not posted a gain since May. Durable Goods was awful, posting a decline of 2.0%, well below the estimate of a 1.5% drop.

Over in the UK, Second Estimate GDP continues to climb, and posted a strong gain of 0.8% in Q3, matching the forecast. This was the highest level we’ve seen since 2010, underscoring an improving British economy. The news was not all good, as CBI Realized Sales confounded the markets for a second straight month. The consumer spending indicator showed little change from last month, with a reading of just 1 point. This was way off the estimate of 12 points. The British economy is expanding, but consumer spending remains weak, as underscored by this release as well as a decline in Retail Sales earlier in November.

BOE Governor Mark Carney testified before the Treasury Committee in parliament on Tuesday. Carney said that despite the improving economic picture, there was plenty of slack in the British employment market, and that the BOE might hold off on a rate hike even if unemployment fell below the 7% level. Carney emphasized that the 7% mark was a threshold rather than a trigger for a rate increase. As the UK economy is growing at the fastest clip amongst developed countries, there has been speculation about the possibility of a rate hike to cool down the economy. Carney continues to try and dampen such expectations, and appears to have ruled out any hikes in the near future.

 

GBP/USD for Wednesday, November 27, 2013

Forex Rate Graph 21/1/13

GBP/USD November 27 at 17:00 GMT

GBP/USD 1.6261 H: 1.6330 L: 1.6198

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6000 1.6125 1.6231 1.6300 1.6476 1.6600

 

  • GBP/USD continues to climb in Wednesday trading. The pair was up sharply in the European session and pushed above the 1.63 line. It has retracted in North American trading.
  • 1.6231 has reverted to a support role as the pair moves higher. This is followed by support at 1.6125.
  • On the upside, the round number of 1.6300 is providing resistance. Given the strong upward movement by the pound, this line cannot be considered strong. The next line of resistance is 1.6476.
  • Current range: 1.6231 to 1.6300

 

Further levels in both directions:

  • Below: 1.6231, 1.6125, 1.6000, 1.5877, 1.5756 and 1.5645
  • Above: 1.6300, 1.6476, 1.6600 and 1.6696

 

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in Wednesday trading. This is not reflected in the pair’s current movement, as the pound has posted gains against the US dollar. Short positions continue to dominate the ratio, reflecting a trader bias towards the US dollar posting gains against the pound.

The pound continues to push hard against the dollar and crossed above the 1.63 line before retracting. We could see the pair settle down during the North American session after posting sharp gains earlier the day.

 

GBP/USD Fundamentals

  • 9:30 British Second Estimate GDP. Estimate 0.8%. Actual 0.8%.
  • 9:30 British Preliminary Business Investment. Estimate 2.3%. Actual 1.4%.
  • 9:30 British Index of Services. Estimate 0.4%. Actual 0.7%.
  • 9:30 British CBI Realized Sales. Estimate 12 points. Actual 1 point.
  • 13:30 US Core Durable Goods Orders. Estimate.0.5%. Actual -0.1%.
  • 13:30 US Unemployment Claims. Estimate 331K. Actual 316K.
  • 13:30 US Durable Goods Orders. Estimate -1.5%. Actual -2.0%
  • 14:45 US Chicago PMI. Estimate 60.6 points.
  • 14:55 US Revised UoM Consumer Sentiment. Estimate 73.1 points.
  • 14:55 US Revised UoM Inflation Expectations. Actual 2.9%.
  • 15:00 CB Leading Index. Estimate 0.1%. Actual 0.2%.
  • 15:30 US Crude Oil Inventories. Estimate 0.5M. Actual 3.0M.
  • 17:00 US Natural Gas Storage. Estimate -11B

 

*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.