GBP/USD – Calm Ahead of Fed Policy Statement

GBP/USD has shown limited activity on Wednesday, as the pair trades in the mid-1.61 range in North American trade. In economic news, British Net Lending to Individuals met expectations, and BOE Chief Economist Andy Haldane will speak in Birmingham. In the US, all eyes are on the Federal Reserve, which will issue a policy statement and is widely expected to wind up its QE program.

The Federal Reserve will be in the spotlight on Wednesday as the US central bank releases its monthly statement. It is widely expected that the Fed will wind up its stimulus scheme, which has been in place since September 2012. Such a symbolic step would mark a vote of confidence in the economy from the powerful Fed. The markets will also be looking for hints regarding the timing of a rate hike, which is expected sometime in 2015. The Fed has noted its concern about the lack of growth in Europe, and a slowdown in China could put a rate hike on hold. Traders should treat the FOMC policy statement as a market-mover which could have a significant impact on the currency markets.

Despite a strong US recovery, durable goods data continues to point to weakness in the manufacturing sector. In September, Core Durable Goods Orders dropped 0.2%, its second decline in three months. This was well short of the estimate of 0.5%. Durable Goods Orders followed suit with a decline of -1.3%. This was the indicator’s second straight decline and missed the estimate of 0.4%. There was much better news from CB Consumer Confidence, as the indicator climbed to 94.5 points, up sharply from 86.0 points. The easily beat the estimate of 87.4 and marked a 7-year high.

 

GBP/USD for Wednesday, October 29, 2014

GBP/USD October 29 at 16:10 GMT

GBP/USD 1.6141 H: 1.6163 L: 1.6103

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5864 1.6000 1.6141 1.6263 1.6382 1.6524

 

  • GBP/USD showed little movement in the Asian session. The pair showed more activity during the European and North American session.
  • On the downside, 1.6141 is fluid. Will the pair break below this level? 1.6000 is stronger.
  • 1.6263 is a strong resistance line.
  • Current range: 1.6141 to 1.6263

Further levels in both directions:

  • Below: 1.6141, 1.6000, 1.5864, 1.5717 and 1.5644
  • Above 1.6263, 1.6382, 1.6524 and 1.6643

 

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged on Wednesday. This is consistent with GBP/USD, which is unchanged on the day. The ratio has a slight majority of long positions, indicative of trader bias towards the pound breaking out and posting gains.

 

GBP/USD Fundamentals

  • 9:30 British Net Lending to Individuals. Estimate 2.8B. Actual 2.7B.
  • 9:30 British M4 Money Supply. Estimate 0.5%. Actual -0.7%.
  • 9:30 British Mortgage Approvals. Estimate 63K. Actual 61K.
  • 14:30 US Crude Oil Inventories. Estimate 3.3M. Actual 2.1M.
  • 18:00 US FOMC Statement.
  • 18:00 US Federal Funds Rate. Estimate <0.25%.

* 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.