GBP/USD – Pound Jumps on Weak US Durable Reports

The pound has posted strong gains on Tuesday. In the North American session, GBP/USD is trading just shy of the 1.52 line. It was a busy day on the releaser front. British GDP posted a gain of 0.5%. In the US, the news was mixed. Durable Goods Orders posted a sharp decline of 3.4%. Elsewhere, New Home Sales rose to 481 thousand, and CB Consumer Confidence jumped to 102.9 points.

Preliminary British GDP for Q4 posted a gain of 0.5% in Q4. This was lower than the gain of 0.7% for Final GDP for Q3, as economic growth has slowed down. Still, the battered pound managed to shrug off this reading, as GBP/USD has posted sharp gains on Tuesday. With British growth and inflation levels easing, there is less pressure on BOE Governor Carney to raise interest rates, and this divergence with the Federal Reserve could boost the dollar at the expense of the pound.

It was a busy day for US releases. Durable Good reports disappointed, as Durable Goods Orders plunged 3.4%, marking a 4-month low. There was no relief from Core Durable Goods Orders, which declined by 0.8%, its fifth drop in six readings. The markets had expected gains from both indicators. There was much better news later in the day, as CB Consumer Confidence jumped to 102.9 points, crushing the estimate of 95.3 points. New Home Sales followed suit, rising to 481 thousand, well above the forecast of 452 thousand.

Greeks went to the polls on Sunday, and the far-left Syriza party emerged victorious. Syriza ran on a platform of ending the crushing austerity scheme which Greeks have endured as part of the €240 billion bailout negotiated between and the EU, ECB and IMF. Predictably, the euro fell after the election results but has since stabilized, gaining over 100 points on Monday. Syriza’s win certainly throws a monkey wrench into the Greek bailout program, but the new Greek government is likely to negotiate a deal with Greece’s creditors. A Greek exit from the Eurozone may make for interesting headlines, but such a scenario is considered unlikely. Indeed, Greek Prime Minister-elect Alexis Tsipras has promised to keep Greece in the Eurozone. Still, there remains plenty of uncertainty as to what will happen with the bailout plan, so traders can expect events in Athens to have a strong impact on the currency markets.

GBP/USD for Tuesday, January 27, 2015

GBP/USD January 27 at 16:25 GMT

GBP/USD 1.5193 H: 1.5223 L: 1.5060

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.4873 1.5008 1.5165 1.5282 1.5392 1.5505

 

  • GBP/USD was flat in the Asian session. After choppy trading in the European session, the pair has posted gains in North American trade.
  • 1.5165 is a weak support line. 1.5008 is stronger.
  • 1.5282 is an immediate resistance line.
  • Current range: 15165 to 1.5282

Further levels in both directions:

  • Below: 1.5165, 1.5008, 1.4873, 1.4781 and 1.4670
  • Above: 1.5282, 1.5392, 1.5505 and 1.5642

 

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Tuesday. This is consistent with the pound’s sharp gains, as many long positions have been covered, resulting in a larger percentage of open short positions. The ratio currently has a majority of short positions, indicative of trader bias towards the pound reversing direction and moving lower.

GBP/USD Fundamentals

  • 9:30 British Preliminary GDP. Estimate 0.6%. Actual 0.5%.
  • 9:30 British BBA Mortgage Approvals. Estimate 36.6K. Actual 35.7K.
  • 9:30 British Index of Services. Estimate 1.0%. Actual 0.8%.
  • 13:30 US Core Durable Goods Orders. Estimate +0.6%. Actual -0.8%.
  • 13:30 US Durable Goods Orders. Estimate +0.6%. Actual -3.4%.
  • 14:00 US S&P/CS Composite-20 HPI. Estimate 4.4%. Actual 4.3%.
  • 14:45 US Flash Services PMI. Estimate 53.9 points. Actual 54.0 points.
  • 15:00 US CB Consumer Confidence. Estimate 95.3 points. Actual 102.9K,
  • 15:00 US New Home Sales. Estimate 452K. Actual 481K.
  • 15:00 US Richmond Manufacturing Index. Estimate 6 points. Actual 6 points.

*Key releases are highlighted in bold

*All release times are GMT

 

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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.