GBP/USD – Steady as US, UK Numbers Disappoint

The pound is steady on Thursday, as GBP/USD trades in the mid-1.60 range in the North American session. On the release front, British numbers were dismal, highlighted by Retail Sales, which declined 0.3%. BBA Mortgages and CBI Industrial Expectations also softened last month. In the US, jobless claims disappointed, jumping to 284 thousand.

US Unemployment Claims rose to 284 thousand last week, much higher than the previous reading of 264 thousand. However, the markets were not too concerned, as the four-week average, which is less volatile than the weekly release, dipped to 281,000, a 14-year low. Meanwhile, weak inflation levels continue to point to slack in the economy. On Wednesday, this trend continued with soft consumer inflation numbers. CPI rose to +0.1%, an improvement from the previous reading of -0.2%. The estimate stood at 0.0%, so the markets clearly did not have high expectations. It was a similar story from Core CPI, which also posted a 0.1% gain, up from 0.0% a month earlier. This was shy of the forecast of 0.2% but still within expectations.

It was a day to forget for British releases, which looked awful across the board. Retail Sales, the primary gauge of consumer spending, declined by 0.3%, its worst showing since May. BBA Mortgage Approvals dropped for a third-straight month, slipping to 39.3 thousand. CBI Industrial Order Expectations rounded out the bad news with a reading of -6 points, its worst showing since June 2013. Preliminary GDP will be released tomorrow, and the pound could take a hit if the indicator fails to meet expectations.

The BoE released the minutes of its last policy meeting, in which the central bank maintained interest rates at 0.50%. The minutes pointed to dissension among the board members, as the vote was 7-2 in favor of holding rates, with the minority arguing in favor of a hike to 0.75%. The release comes on the heels of remarks on Friday by BoE chief economist Andrew Haldane, who said that he was in against raising rates due to concerns about weak domestic and global growth. The vote to maintain QE at 375 billion was unanimous (9-0).

 

GBP/USD for Thursday, October 23, 2014

GBP/USD October 23 at 17:40 GMT

GBP/USD 1.6035 H: 1.6060 L: 1.5995

 

GBP/USD Technical

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

 

  • GBP/USD lost ground late in the Asian session and this continued early in the European session. The pair then reversed directions and continues to move higher in the North American session.
  • The round number of 1.6000 was tested but remains in a support role. 1.5864 is stronger.
  • 1.6141 is a strong line of resistance.
  • 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 unchanged on Thursday, continuing the trend we have seen for most of the week. This is consistent with GBP/USD, which is almost unchanged over the day. The ratio has a slight majority of long positions, indicative of trader bias towards the pound moving upwards.

 

GBP/USD Fundamentals

  • 8:30 British Retail Sales. Estimate -03%. Actual -0.1%.
  • 8:30 British BBA Mortgage Approvals. Estimate 41.5K. Actual 39.3K.
  • 10:00 British CBI Industrial Order Expectations. Estimate -3 points. Actual -6 points.
  • 12:30 US Unemployment Claims. Estimate 269K. Actual 283K.
  • 13:00 US HPI. Estimate 0.4%. Actual 0.5%.
  • 13:45 US Flash Manufacturing PMI. Estimate 57.2 points. Actual 56.2 points.
  • 14:00 US CB Leading Index. Estimate 0.8%. Actual 0.9%.
  • 14:30 US Natural Gas Storage. Estimate 97B. Actual 94B.

* 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.