The British pound continues to point southwards on Monday. In the European session, GBP/USD is trading in the mid-1.61 range, its lowest level since November. The pound is under strong pressure as polls show that support for backers of Scottish independence is increasing. In the UK, Halifax HPI posted a weak gain of 0.1% last month. In the US, it’s a quiet start to the week, with no major releases on Monday.
US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand, its lowest gain since January. The markets had expected a gain of 226 thousand. This follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims. There was better news from the services sector, as the ISM Non-Manufacturing PMI continued its impressive climb, hitting 59.6 points in August, well above the estimate of 57.3. This reading follows the ISM Manufacturing PMI, which climbed to 59.0 points. The impressive readings from the manufacturing and services sectors point to a balanced economic recovery. If US numbers continue to improve, we could see an interest rate hike in the early part of 2015.
The pound’s latest troubles are blowing north of London, as Scottish voters will vote in a referendum on independence later this month. Polls taken on the weekend show that supporters of independence are gaining ground and hold a slight majority. If voters do choose to leave the UK, this would create a lot of questions and uncertainty, including what currency an independent Scotland would use. As voting day looms closer, we are likely to see more pressure on the pound.
There were no surprises from the BoE late last week, which held steady with its monetary policy. The central bank maintained interest rate levels at 0.50%, where rates have been pegged since February 2009. With two MPC members voting in favor of raising rates last month, the markets will be keenly interested in seeing the breakdown of Thursday’s vote, which will be released in two weeks time. If the minutes show that additional MPC members are in favor of a rate hike, BoE Governor Mark Carney will be under pressure to raise rates, which would bolster the pound. The central bank also kept QE steady at 375 billion pounds.
GBP/USD for Monday, September 8, 2014
GBP/USD September 8 at 15:45 GMT
GBP/USD 1.6142 H: 1.6233 L: 1.6103
- The pound continues to lose ground and is testing support at 1.6141. The round number of 1.6000 follows.
- 1.6263 has reverted to a resistance role as the pound has lost ground.
- Current range: 1.6141 to 1.6263.
Further levels in both directions:
- Below: 1.6141, 1.6000 and 1.5864
- Above: 1.6263, 1.6382, 1.6484 and 1.6565
OANDA’s Open Positions Ratio
GBP/USD ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as the pound has lost more ground. The ratio has a large majority of long positions, indicative of trader bias towards the pound reversing directions and moving higher.
- 6:57 British Halifax HPI Estimate 0.1%. Actual 0.2%.
- 12:45 US Treasury Secretary Jack Lew Speaks.
- 19:00 US Consumer Credit. Estimate 17.4B.
- 23:01 British BRC Retail Sales Monitor.
* Key releases are highlighted in bold
*All release times are GMT