GBP/USD – Calm as BOE Holds the Course

GBP/USD is steady on Thursday, as the pair trades in the mid-1.68 range in the North American range. On the release front, the BOE maintained asset purchase and interest rate levels. Over in the US, Unemployment Claims dipped below the 300 thousand level.

There was positive news from the US labor market, as Unemployment Claims dipped last week. The key indicator dropped to 289 thousand, beating the estimate of 305 thousand. The four-week claims average, which is less volatile than the weekly count, dipped to 293,500, its lowest level since February 2006. The stronger numbers point to increased hiring in response to stronger demand, which in turn has contributed to gains in income and stronger consumer spending. An improving job market is critical for economic growth, and the dollar has gained broad strength as key US data points upwards.

As expected, there were no monetary moves by the BOE on Thursday, as the central bank left untouched the QE and interest rate levels. QE remains at 375 billion pounds, while the benchmark interest rate stays at 0.50%.  On Wednesday, UK Manufacturing Production posted a 0.3% gain. However, the markets had expected more, with an estimate of 0.7%. NIESR GDP Estimate gained just 0.6%, its lowest gain since June 2013. This monthly indicator helps analysts track official GDP, which is released every quarter. Softer readings such as Manufacturing Production and NIESR GDP Estimate have raised concerns that the British economy may be slowing down, and as a result, speculation about a rate hike has faded somewhat.

 

GBP/USD for Thursday, August 7, 2014

GBP/USD August 7 at 16:00 GMT

GBP/USD 1.6844 H: 1.6864 L: 1.6824

 

GBP/USD Technical

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

 

  • GBP/USD has been unable to show any momentum in either direction, spending much of the day around the 1.6840 line.
  • On the downside, 1.6825 was briefly breached for a second straight day and remains under pressure. The round number of 1.67 is stronger.
  • 1.6920 is providing strong resistance.
  • Current range: 1.6825 to 1.6920.

Further levels in both directions:

  • Below: 1.6825, 1.6700, 1.6556 and 1.6484
  • 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. This is not consistent with the movement of the pair, as the pound is showing little activity. The ratio is split almost evenly between long and short positions, indicative of a lack of trader bias as to what direction to expect from the pair.

 

GBP/USD Fundamentals

  • 11:00 BOE Asset Purchase Facility. Estimate 375B. Actual 375B.
  • 11:00 BOE Official Bank Rate. Estimate 0.50%. Actual 0.50%.
  • 12:30 US Unemployment Claims. Estimate 305K. Actual 289K.
  • 14:30 US Natural Gas Storage. Estimate 89B. Actual 82B.
  • 19:00 US Consumer Credit. Estimate 18.3B.

* 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.