GBP/USD – Pound Posts Gains As CPI Points Higher

The British pound has posted modest gains on Tuesday, as GBP/USD trades in the mid-1.68 range in Tuesday’s North American session. There was good news from the UK on the inflation front, as CPI improved in April and beat the estimate. Inflation indicators were generally within expectations, although PPI Input looked sluggish, sliding to a seven-month low. Later in the day, BOE Deputy Governor Charles Bean speaks in London. In the US, today’s only releases are speeches from two FOMC members.

With the British economy showing marked improvement and speculation swirling about a rate increase from the BOE, British inflation indicators are being closely scrutinized. On Tuesday, CPI, the primary gauge of consumer spending, put an end to a downward skid which we’ve seen since mid-2013. The index improved to 1.8% in April, edging above the estimate of 1.7%. This figure is close to the BOE’s inflation target of 2.0%. Meanwhile, PPI Input posted a fourth consecutive decline, with a reading of -1.1%. This was well of the estimate of 0.0%. We’ll get a look at more key data on Wednesday, with the release of Retail Sales.

In the US, last week ended with encouraging housing numbers. Building Permits jumped to 1.08 million, well above the estimate of 1.01 million. This was the highest level we’ve seen since December 2006. Housing Starts continues to move higher and climbed to 1.07M, compared to the estimate of 0.98M. This marked a five-month high. Meanwhile, UoM Consumer Sentiment dipped to 81.8 points, short of the estimate of 84.7 points.

GBP/USD for Tuesday, May 20, 2014

GBP/USD May 20 at 15:30 GMT

GBP/USD 1.6842 H: 1.6864 L: 1.6802

GBP/USD Technical

• GBP/USD has moved higher in Tuesday trade. The pair dipped to a low of 1.6802 late in the Asian session.
• On the upside, 1.6896 has weakened as the pound trades at higher levels. The key level of 1.70 is stronger.
• 1.6765 has some breathing room in support. The next support level is at 1.6705.

Further levels in both directions:

• Below: 1.6765, 1.6705, 1.6549 and 1.6436
• Above: 1.6896, 1.70, 1.7210, 1.7374 and 1.7538

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions in Tuesday trading. This is consistent with the movement of the pair, as the pound has moved higher. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar reversing direction and moving higher against the pound.

GBP/USD has posted gains on Tuesday. The pair has edged higher in the North American session.

GBP/USD Fundamentals

• 8:30 British CPI. Estimate 1.7%. Actual 1.8%.
• 8:30 British PPI Input. Estimate 0.0%. Actual -1.1%.
• 8:30 British RPI. Estimate 2.6%. Actual 2.5%.
• 8:30 British Core CPI. Estimate 1.8%. Actual 2.0%.
• 8:30 British HPI. Estimate 10.7%. Actual 8.0%.
• 8:30 British PPI Output. Estimate 0.2%. Actual 0.0%.
• 16:30 FOMC Member Charles Plesser Speaks.
• 17:00 FOMC Member William Dudley Speaks.
• 17:30 BOE Deputy Governor Charles Bean Speaks.

*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.