GBP/USD – Struggling Pound Falls Below 1.69

GBP/USD continues its losing ways on Thursday, as the pair below the 1.69 level in the North American session. The pound has surrendered about 100 points this week to the surging US dollar. In economic news, British Nationwide HPI posted a weak gain of 0.1%. In the US, Unemployment Claims softened, but met expectations.

The British pound continues to head south, and dropped below 1.69 on Thursday, its lowest level since mid-June. The currency didn’t get any help from Nationwide HPI, an important housing inflation indicator. The index posted a gain of just 0.1%, its weakest performance in over a year. The markets had forecast a healthy gain of 0.6%. On Friday, the UK releases Manufacturing PMI, and this key index could have a significant impact on the direction of GDP/USD.

In the US, Unemployment Claims rose last week, hitting 302 thousand. This was within expectations, as the estimate stood at 303 thousand. We’ll get another look at key employment data on Friday, as the US releases Nonfarm Payrolls and the unemployment rate. Earlier in the week, ADP Nonfarm Payrolls softened, and the markets are bracing for a weak reading from the Friday NFP release, which could push the dollar down against its major rivals.

In the US, Advance GDP soared in Q2, posting a gain of 4.0%. This easily beat the estimate of 3.1%. The boost in economic activity was boosted by strong consumer confidence and business activity in Q2. The dollar has responded positively, posting broad gains. Earlier in the week, CB Consumer Confidence pointed to an optimistic US consumer. The key indicator jumped to 90.9 points, crushing the estimate of 85.5 points. This was the indicator’s highest level since September 2007. Consumer confidence is closely tracked by analysts since a confident consumer is likely to increase consumption, which is critical for economic growth.

 

GBP/USD for Thursday, July 31, 2014

GBP/USD July 31 at 14:05 GMT

GBP/USD 1.6887 H: 1.6927 L: 1.6858

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6556 1.6700 1.6825 1.6920 1.7000 1.7183

 

  • GBP/USD lost ground late in the Asian session, and this continued throughout European trading, with the pair slipping to a low of 1.6858. The pound has changed directions and edged higher in the North American session.
  • 1.6825 has weakened in support as the pound trades at lower levels. The round number of 1.67 is stronger.
  • 1.6920 remains an immediate resistance line. The key 1.70 level is next.
  • Current range: 1.6825 to 1.6920.

Further levels in both directions:

  • Below: 1.6825, 1.6700 and 1.6556
  • Above: 1.6920, 1.7000, 1.7183 and 1.7228

 

OANDA’s Open Positions Ratio

GBP/USD is pointing to gains in long positions in Thursday trade, reversing the direction seen yesterday. This is not consistent with the movement of the pair, as the pound continues to lose ground. The majority of open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar continuing to move higher.

 

GBP/USD Fundamentals

  • 5:59 British Nationwide HPI. Estimate 0.6%. Actual 0.1%.
  • 11:30 US Challenger Job Cuts. Actual 24.4%.
  • 12:30 US Unemployment Claims. Estimate 303K. Actual 302K.
  • 12:30 US Employment Cost Index. Estimate 0.5%. Actual 0.7%.
  • 13:45 US Chicago PMI. Estimate 63.2 points. Actual 52.6 points.
  • 14:30 US Natural Gas Storage. Estimate 92B. Actual 88B.

* 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.