GBP/USD – Pound Loses Ground as British GDP Dips in Q3

GBP/USD has posted losses on Tuesday, as the pair trades slightly above the 1.55 line in the North American session. The pound continues to lose ground and has given up about 200 points in less than a week. On the release front, British GDP edged down to 0.7%, while the current account deficit jumped to GBP 27.0 billion. In the US,  it was a very busy day, ahead of the Christmas holiday. Final GDP soared in the third quarter, with a gain of 5.0%, but Core Durable Goods Orders dropped by 0.4%. New Home Sales disappointed, dropping sharply to 438 thousand.

In the US, there were a host of key events, with mixed results. GDP was red-hot in Q3, jumping 5.0%, ahead of the estimate of 4.6%. This marked the indicator’s strongest gain since the third quarter of 2003. The US economy is expected to continue to surge in 2015, driven by increased consumer spending and lower oil prices. The news was not as positive from Core Durable Goods Orders, which posted a decline of 0.4%, its fourth decline in five readings. The reading was well off the estimate of 1.1%. Durable Goods Orders looked even worse, with a reading of -0.7%. This surprised the markets which had anticipated a strong gain of 3.0%. Elsewhere, housing data continues to weaken as New Home Sales slipped to 438 thousand, its poorest showing since July. This was well short of the forecast of 461 thousand. UoM Consumer Sentiment continues to rise, hitting 93.6 points in December. This marked its highest level since February 2007, as the US consumer remains very optimistic about the economy as we move into 2015.

British GDP came in at 0.7% in the Q3, matching the forecast. This was slightly lower than the revised release for Q2 of a 0.8% gain, but still a very respectable figure. Current Account surprised as the deficit ballooned to GDP 27.0 billion, much higher than the estimate of GDP 21.1 billion. Mortgage Approvals softened for a fifth straight month, dropping to 36.7 thousand. This missed the forecast of 37.3 thousand.

GBP/USD for Tuesday, December 23, 2014

GBP/USD December 23 at 16:25 GMT

GBP/USD 1.5508 H: 1.5609 L: 1.5487

GBP/USD Technical

• GBP/USD was flat in the Asian session. The pair posted sharp losses in European trading, putting strong pressure on support at 1.5505. The pair is stable in the North American session.
• On the upside, 1.5644 has some breathing room as the pound has lost ground.
• 1.5505 is under strong pressure and could break during the North American session. 1.5392 is stronger.
• Current range: 1.5505 to 1.5644

Further levels in both directions:

• Below: 1.5505, 1.5392, 1.5282 and 1.5165
• Above: 1.5644, 1.5717, 1.5864, 1.6000 and 1.6141

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Tuesday. This is not consistent with the movement of the pair, as the pound has lost ground. The ratio has a majority of long positions, indicative of trader bias towards the pound reversing direction and moving higher.

GBP/USD Fundamentals

• 9:30 British Current Account. Estimate -21.1B. Actual -27.0B.
• 9:30 British BBA Mortgage Approvals. Estimate 37.3K. Actual 36.7K.
• 9:30 British Final GDP. Estimate 0.7%. Actual 0.7%.
• 9:30 British Index of Services. Estimate 0.7%. Actual 0.7%.
• 9:30 British Revised Business Investment. Estimate -0.7%. Actual -1.4%.
• 13:30 US Core Durable Goods Orders. Estimate 1.1%. Actual -0.4%.
• 13:30 US Final GDP. Estimate 4.3%. Actual 5.0%.
• 13:30 US Durable Goods Orders. Estimate 3.0%. Actual -0.7%.
• 13:30 US Final GDP Price Index. Estimate 1.4%. Actual 1.4%.
• 14:00 US HPI. Estimate 0.3%. Actual 0.6%.
• 14:55 US Revised UoM Consumer Sentiment. Estimate 93.5 points. Actual 93.6 points.
• 14:55 US Revised UoM Inflation Expectations. Actual 2.8%.
• 2:59 US Richmond Manufacturing Index. Estimate 8 points. Actual 7 points.
• 15:00 US New Home Sales. Estimate 461K. Actual 438K.
• 15:00 US Core PCE Price Index. Estimate 0.1%. Actual 0.0%.
• 15:00 US Personal Spending. Estimate 0.5%. Actual 0.6%.
• 15:00 US Personal Income. Estimate 0.6%. Actual 0.4%.

*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.