GBP/USD – Pound Choppy Ahead of Inflation Data

GBP/USD has been marked by choppy trading on Monday, as the pair showed some strength but was unable to consolidate these gains. It’s a quiet start to the week, with no data out of the UK. In the US, the Empire State Manufacturing Index missed the estimate but still showed strong improvement in November, with a reading of 10.2 points.

US consumer indicators looked strong on Friday. Retail Sales and Core Retail Sales both posted gains of 0.3%, edging above the estimate of 0.2%. UoM Consumer Sentiment continued its upward trend, climbing to 89.7 points in November. This was the indicator’s strongest performance since July 2007. Meanwhile, US Unemployment Claims has looked solid in recent readings, but the key indicator jumped to 290 thousand, missing the estimate of 282 thousand. This marked a seven-week high for the key indicator. The news wasn’t any better from JOLTS Jobs Openings, which weakened to 4.74M, down from 4.84M a month earlier. The estimate stood at 4.81M.

We’ll get a look at a host of UK inflation indicators on Tuesday, led by CPI. Inflation numbers have been in the spotlight recently, and last week’s BoE Inflation Report, which was more dovish than expected, led to the pound tumbling over 100 points. A weak CPI reading will relieve pressure on the BoE to raise rates, so the pound stands to lose ground if CPI doesn’t meet expectations. The estimate stands at 1.2%, unchanged from the previous release.

 

GBP/USD for Monday, November 17, 2014

GBP/USD November 17 at 16:00 GMT

GBP/USD 1.5654 H: 1.5736 L: 1.5620

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5392 1.5505 1.5644 1.5717 1.5864 1.6000

 

  • GBP/USD had a rocky Asian session, posting gains but then reversing directions and sustaining sharp losses. The pair continued to lose ground in the European session but then stabilized. GBP/USD has shown little movement in North American trade.
  • On the upside 1.5717 was tested earlier but remains an immediate resistance line. 1.5864 is next.
  • 1.5644 was also tested and is a weak support level. Will the pair break below this line? 1.5505 is stronger.
  • Current range: 1.5644 to 1.5717

Further levels in both directions:

  • Below: 1.5644, 1.5505, 1.5392 and 1.5282
  • Above: 1.5717, 1.5864, 1.6000, 1.6141 and 1.6263

 

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged on Monday. This is consistent with GBP/USD, which has shown little net movement on the day. The ratio is pointing to a majority of long positions, indicative of trader bias towards the pound moving higher.

 

GBP/USD Fundamentals

  • 9:30 BoE Chief Economist Andy Haldane Speaks.
  • 13:30 US Empire State Manufacturing Index. Estimate 12.1 points. Actual 10.2 points.
  • 14:15 US Capacity Utilization Rate. Estimate 79.3%. Actual 78.9%.
  • 14:15 US Industrial Production. Estimate 0.2%. Actual -0.1%.

* Key releases are highlighted in 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.