The pound pushed above the 1.63 line on Wednesday, marking a two-week high for GBP/USD. The currency received a helping hand from strong UK employment numbers, as Claimant Count Change dropped sharply and the unemployment rate continued to improve. As well, Average Earnings Index beat the estimate. In the US, the news was not as cheery, as Core CPI slipped to -0.2% last month. The Federal Reserve will release a statement later in the day following its policy meeting.
The struggling British pound received a boost on Wednesday, as employment numbers were solid. Claimant Count Change dropped by -37.2 thousand, its best showing since October. This was much better than the estimate of 27.9 thousand. The unemployment rate dipped to an impressive 6.2%, its sixth straight drop this year. This edged below the estimate of 6.3%. Elsewhere, there were no surprises from the BoE votes on asset purchases and interest rate levels. The vote to maintain asset purchases was 9-0, while there was a split of 7-2 over interest rate levels, the same outcome as the previous vote. The majority of board members voted to maintain rates at 0.50%, while two members were in favor of an immediate rate hike.
The news on the inflation front was not as positive, as British CPI, the primary gauge of consumer inflation, dropped to 1.5%, which matched the forecast. The index has lost ground for two straight months, pointing to weaker consumer demand. There was no relief from PPI Input, as the manufacturing inflation index posted its ninth consecutive decline, at -0.6%. This was well short of the estimate of +1.0%.
Will the United Kingdom remain united on Friday? It’s anyone’s guess as Scottish voters cast their ballots in a historic referendum on independence on Thursday. 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. A vote to split up the UK could lead to turmoil in the markets and weigh heavily on the markets. Traders should treat the referendum as a market-mover, as a close vote could have negative repercussions for the pound.
GBP/USD for Wednesday, September 17, 2014
GBP/USD September 17 at 15:45 GMT
GBP/USD 1.6243 H: 1.6251 L: 1.6162
- The pound moved higher in the Asian and European sessions. The pair has edged lower in North American trade.
- 1.6141 has strengthened in support as the pair trades at higher levels.
- 1.6263 is an immediate resistance line. Will the pound break through this level? 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 strong gains in long positions on Wednesday, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as the pound has posted gains. The ratio currently has a majority of long positions, indicative of trader bias towards GBP/USD moving higher.
- 8:30 British Average Earnings Index. Estimate 0.5%. Actual 0.6%.
- 8:30 British Claimant Count Change. Estimate -29.7K. Actual -37.2K.
- 8:30 MPC Asset Purchase Facility Votes. Estimate 0-0-9. Actual 0-0-9.
- 8:30 MPC Official Bank Rate Votes. Estimate 2-0-7. Actual 2-0-7.
- 8:30 British Unemployment Rate. Estimate 6.3%. Actual 6.2%.
- 12:30 US CPI. Estimate +0.1%. Actual -0.2%.
- 12:30 US Core CPI. Estimate 0.2%. Actual 0.0%.
- 12:30 US Current Account. Estimate -114B. Actual -99B.
- 14:00 US NAHB Housing Market Index. Estimate 56 points. Actual 59 points.
- 14:30 US Crude Oil Inventories. Estimate -0.9M. Actual -114B.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Funds Rate. Estimate <0.25%.
- 18:30 US FOMC Press Conference.
* Key releases are highlighted in bold
*All release times are GMT