GBP/USD – Pound Plunges On Weak UK Data

GBP/USD has surrendered over 100 points on Wednesday, as the pair trades just above the 1.67 line in the North American session. The pound is trading at its lowest level in over a month, following a sharp slide in British CBI Realized Sales. In the US, there are no releases on Wednesday.

UK releases have not had a good week. CBI Realized Sales plunged to 16 points in April, down sharply from 30 points a month earlier. This drop surprised the markets, which had expected a strong reading of 36 points On Tuesday, BBA Mortgage Approvals softened for the third consecutive month. The indicator dropped to 42.2 thousand, well off the estimate of 45.2 thousand. This was the lowest level we’ve since last September, and could point to trouble in the UK housing sector. Is the British economy running out of steam? If so, a slowdown could push off any rate increases by the Bank of England. As BOE Governor Mark Carney has told anyone who is interested in listening, the central bank is no hurry to raise rates until the economy shows signs of stronger growth and less slack.

The US consumer continues to be optimistic, which is good news for the US recovery. On Tuesday, CB Consumer Confidence continued to look strong as the key indicator improved to 83.0 points in April, which was within  expectations. This was the third straight reading above the 80-point level. Meanwhile, the Standard & Poor’s/Case-Shiller house price index posted a strong gain of 12.4%, surpassing the estimate of 11.9%. The markets are keeping a close eye on Thursday’s key events, with the release of Preliminary GDP and the all-important Unemployment Claims.

 

GBP/USD May 28 at 15:00 GMT

GBP/USD 1.6702 H: 1.6816 L: 1.6699

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6436 1.6549 1.6705 1.6765 1.6896 1.700

 

  • GBP/USD has dropped sharply on Wednesday. The pair has been heading downwards since late in the Asian session.
  • On the upside, 1.6896 has some breathing room as the pound has lost ground.
  • 1.6765 is providing support. 1.6705 is stronger.

Further levels in both directions:

  • Below: 1.6705, 1.6549, 1.6436 and 1.6346
  • Above: 1.6765, 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 Wednesday trade. With the pound taking a tumble, numerous open short positions have been covered, resulting in a greater percentage of open long positions. A majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar posting further gains against the pound.

GBP/USD has dropped sharply on Wednesday. In the North American session, the pair continues to lose ground.

 

GBP/USD Fundamentals

  • 10:00 British CBI Realized Sales. Estimate 36 points. Actual 16 points.

 

*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.