GBP/USD – Limited Movement Ahead of British Inflation Data

The British pound has started the week quietly, as GBP/USD trades in the mid-1.62 range in Monday’s North American session. The sole event out of the UK is the BoE quarterly bulletin, a minor event. On Tuesday, the UK releases a host of inflation indicators, led by CPI. In the US, the Empire State Manufacturing Index jumped to 27.5 points in August, well above expectations.

US numbers wrapped up last week on a high note. Core Retail Sales improved to 0.3%, edging above the estimate of 0.2%. Retail Sales posted a nice gain of 0.6%, well above the estimate of 0.3%. There was excellent news from the UoM Consumer Sentiment, which bounced back from a weak reading in July and improved to 84.6 points, its best showing since November 2012. The forecast stood at 83.2 points. These indicators point to an increase in consumer confidence and spending, which underscore a deepening economic recovery.

US employment data disappointed on Thursday. Unemployment Claims rose to 315 thousand, the largest number of claims in 10 weeks. The reading was much higher than the estimate of 306 thousand. This follows soft numbers from JOLTS Job Openings and a dismal Nonfarm Payrolls last week. The troubling job numbers are unlikely to affect the Fed’s plan to continue trimming QE later this week, but a soft labor market could postpone plans to raise interest rates by mid-2015.

Scotland’s future is weighing on the pound, as Scottish voters cast their ballots in a referendum on independence on September 18th. The most recent polls are pointing to a close vote, with many voters still undecided. If voters do choose to secede from the UK, this would create plenty of questions and uncertainty, including what currency an independent Scotland would use and how the national debt would be divided. As voting day looms closer, we could see significant volatility from the pound.

GBP/USD for Monday, September 15, 2014

GBP/USD September 15 at 15:30 GMT

GBP/USD 1.6233 H: 1.6268 L: 1.6227

GBP/USD Technical

• It’s been an uneventful day for the pound. The currency touched a high of 1.6268 in the European session but has retracted.
• 1.6141 is providing strong support.
• 1.6263 is an immediate resistance line. 1.6382 is stronger.
• Current range: 1.6141 to 1.6263.

Further levels in both directions:

• Below: 1.6141, 1.6000, 1.5864, 1.5731 and 1.5628
• Above: 1.6263, 1.6382, 1.6484 and 1.6605

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 posted slight losses. The ratio shows an even split between short and long positions, indicative of a lack of trader bias as to what direction GBP/USD will take next.

GBP/USD Fundamentals

• 12:30 US Empire State Manufacturing Index. Estimate 16.4 points. Actual 27.5 points.
• 13:15 US Capacity Utilization Rate. Estimate 79.3%. Actual 78.8%.
• 13:15 US Industrial Production. Estimate 0.4%. Actual -0.1%.
• 23:01 BoE Quarterly Bulletin.

* Key releases are highlighted in bold

*All release times are GMT

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