GBP/USD – Pound Steady in Light Trade

The pound is calm on Monday, as GBP/USD trades in the mid-1.61 range. On the release front, it’s a very quiet start to the week, with no releases out of the UK. In the US, today’s sole release is a speech from FOMC member Jeremy Powell. On Sunday, British Rightmove HPI posted a sharp gain of 2.6%, its best performance in five months.

US releases wrapped up the week on a high note, as UoM Consumer Sentiment climbed to 86.4 points, its highest reading since July 2007. The markets had expected a reading of 84.3 points. This indicates that the US consumer remains optimistic about the economy and is not overly concerned about warnings of a global slowdown. On the housing front, Building Permits and Housing Starts met expectations. Strong US employment numbers continue to drive the US recovery, as US job claims dropped to 264 thousand, marking a 14-year low. The estimate stood at 286 thousand.

On Wednesday, the pound got a boost thanks to strong British numbers. In the UK, Average Earnings Index edged up to 0.7%, matching the estimate. This was a four-month high for the indicator, which is an important indicator of consumer inflation. On the employment front, Claimant Count Change continues to drop, although the reading of -18.6 thousand was well off the forecast of -34.2 thousand. The unemployment rate dropped from 6.2% to 6.0%, its lowest level since November 2008. With both the UK and US continuing to reel off solid job data, the markets are expecting some tightening in monetary stance from both the Federal Reserve and the BoE sometime in 2015.

 

GBP/USD for Monday, October 20, 2014

GBP/USD October 20 at 14:40 GMT

GBP/USD 1.6135 H: 1.6151 L: 1.6080

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5717 1.5864 1.6000 1.6141 1.6263 1.6382

 

  • GBP/USD edged lower in the Asian session but recovered early in European trade and continued to move upwards, briefly breaking above resistance at 1.6141. The pair is steady in the North American session.
  • The round number of 1.6000 continues to provide strong support.
  • On the upside, 1.6141 is fluid and could see further action during the day. 1.6263 is stronger.
  • Current range: 1.6000 to 1.6141

Further levels in both directions:

  • Below: 1.6000, 1.5864, 1.5717, 1.5644 and 1.5460
  • Above 1.6141, 1.6263, 1.6382 and 1.6484

 

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged on Monday. This is not consistent with the pair’s movement, as the pound has posted slight gains. The ratio has a slight majority of long positions, indicative of trader bias towards the pound continuing to move higher.

 

GBP/USD Fundamentals

  • 14:00 US FOMC Member Jerome Powell Speaks.

* Key releases are in highlighted 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.