GBP/USD – Little Change After Key US, UK Numbers

GBP/USD has posted small gains on Thursday, as the pair trades in the high-1.56 range in the North American session. On the release front, it’s been a busy day, with a host of key releases out of the US and UK. British Retail Sales impressed with a 0.8% gain, while Industrial Order Expectations surprised the markets with a strong gain of 3 points. Over in the US, consumer inflation met expectations, as CPI came in at 0.0% and Core CPI posted a gain of 0.2%. Unemployment Claims were almost unchanged, with a reading of 291 thousand. Philly Fed Manufacturing Index soared to 40.8 points and US Existing Home Sales improved to 5.26 million.

In the UK, retail sales and manufacturing indicators pointed upwards in October. Retail Sales posted a strong gain of 0.8%, bouncing back from the previous reading of -0.3%. The indicator easily beat the estimate of 0.4%. CBI Industrial Order Expectations also looked sharp, posting a gain of 3 points. This broke a streak of two straight declines and beat the forecast of -3 points.

US consumer inflation remains weak, but met expectations in November. CPI posted a flat 0.0%, edging above the estimate of -0.1%. Core CPI posted a gain of 0.2%, matching the forecast. Unemployment Claims came in at 291 thousand higher than the estimate of 286 thousand. There was good news as well, as the Philly Fed Manufacturing Index soared to 40.8 points, its highest since March 2011. The estimate stood at 18.9 points. As well, Existing Home Sales improved to 5.26 million, a one year high. The markets had expected a reading of 5.16 million.

The BoE votes on QE and interest rates were released on Wednesday and the vote breakdown was as expected. The vote was unanimous (9-0) to maintain QE at 375 billion pounds, while the vote on interest rate levels was 7-2, with seven MPC members in favor of maintaining rates at 0.50%, while two members were in favor of raising rates. A major factor in the vote was the soft inflation numbers we’re seeing out of the UK. The BoE is expected to raise rates sometime in 2015, but low inflation gives Governor Mark Carney some breathing room before having to step in with a rate hike. Last week, the BoE Inflation Report was unexpectedly dovish, resulting in the pound tumbling over 100 points.

The Federal Reserve released its minutes on Wednesday and there were no clues about the timing of a rate hike. The markets are expecting rates to rise in the second half of 2015, but this will of course depend on economic conditions. With inflation below the Federal Reserve target of 2%, there is less pressure on the Fed to raise rates. The minutes also noted that weak economic outlooks in Europe and Japan are unlikely to have a negative impact on the US economy.

GBP/USD for Thursday, November 20, 2014

GBP/USD November 20 at 17:30 GMT

GBP/USD 1.5685 H: 1.5736 L: 1.5632

 

GBP/USD Technical

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

 

  • GBP/USD tested support at 1.5644 in the Asian session. The pair posted sharp gains in the European session, testing resistance at 1.5717. The pair has surrendered much of these gains in North American trading.
  • On the upside, 1.5717 is a weak line. 1.5864 is stronger.
  • 1.5644 is an immediate resistance line. 1.5505 is next.
  • 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 Thursday. This is not consistent with the movement of GBP/USD, which has posted small gains on the day. The ratio has a majority of long positions, indicative of trader bias towards the pound moving higher.

 

GBP/USD Fundamentals

  • 9:30 British Retail Sales. Estimate 0.4%. Actual 0.8%.
  • 11:00 British CBI Industrial Order Expectations. Estimate -3 points. Actual +3 points.
  • 12:45 US FOMC Member Daniel Tarullo Speaks.
  • 13:30 US CPI. Estimate -0.1%. Actual 0.0%.
  • 13:30 US Core CPI. Estimate 0.2%. Actual 0.2%.
  • 13:30 US Unemployment Claims. Estimate 286K. Actual 291K.
  • 14:45 US Flash Manufacturing PMI. Estimate 56.2 points. Actual 54.7 points.
  • 15:00 US Philly Fed Manufacturing Index. Estimate 18.9 points. Actual 40.8 points.
  • 15:00 US Existing Home Sales. Estimate 5.16M. Actual 5.26M.
  • 15:00 US CB Leading Index. Estimate 0.6%. Actual 0.9%.
  • 15:30 US Natural Gas Storage. Estimate -12B. Actual -17B.
  • 18:30 US FOMC Member Loretta Mester Speaks.

* 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.