GBP/USD is flat on Thursday, as the pair trades just at 1.5260 in the European session. On Wednesday, the Fed surprised the markets with a hawkish policy statement, but the pound only sustained modest losses. Taking a look at Thursday’s economic releases, it’s a busy schedule. British Net Lending to Individuals jumped sharply and beat expectations. There are two key releases out of the US on Thursday – Advance GDP and Unemployment Claims. The US will wind up the week with one market-mover on Friday – US Employment Cost Index.
It was a poor start for British releases this week, as housing and manufacturing data slipped. BBA Mortgage Approvals dipped to 44.5 thousand, short of the forecast of 46.2 thousand. CBI Industrial Order Expectations slumped badly, with a reading of -18 points, its lowest level since July 2013. This points to weaker manufacturing growth due to less demand for British products both domestically and abroad. On Tuesday, British Preliminary GDP in the third quarter posted a gain of 0.5%, shy of the estimate of 0.6%. This is certainly a cause for concern, as Final GDP in the second quarter posted a gain of 0.7%.
The markets had lowered expectations about a rate hike before the end of the year, but the Fed statement revived the possibility of a December hike, stating that it would raise rates when there is further improvement in the US labor market and when inflation rises closer to the 2% target. The markets pounced on the following excerpt from the statement:
“In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation” [emphasis mine]
The next Fed meeting is mid-December, and the markets will be in alert mode for any further hints about a rate hike. As well, key US numbers will be closely monitored, especially employment and inflation data, as the strength of these numbers in the next several weeks will play a critical role in determining whether the Fed will press the rate trigger in December.
With all the excitement surrounding the Fed, traders shouldn’t ignore Thursday’s key events – Advance GDP and Unemployment Claims. The estimate for Advance GDP for the third quarter stand at 1.5%, compared to a Final GDP for Q2 of 3.9%. A reading below the forecast could hurt the US dollar. Unemployment Claims, which came in at 259 thousand last week, has now beaten the estimate for three straight weeks, but are expected to rise to 264 thousand.
Thursday (Oct. 29)
- 6:58 British Nationwide HPI. Estimate 0.5%. Actual 0.6%
- 9:30 British Net Lending to Individuals. Estimate 4.4B. Actual 4.9B
- 9:30 British M4 Money Supply. Estimate -0.2%. Actual -1.0%
- 9:30 British Mortgage Approvals. Estimate 73K. Actual 69K
- 11:00 British CBI Realized Sales. Estimate 35 points. Actual 19 points
- 12:30 US Advance GDP. Estimate 1.6%
- 12:30 US Unemployment Claims. Estimate 264K
- 12:30 Advance GDP Price Index. Estimate 1.5%
- 13:10 FOMC Member Dennis Lockhart Speaks
- 14:00 US Pending Home Sales. Estimate 1.1%
- 14:30 US Natural Gas Storage. Estimate 70B
Upcoming Key Events
Friday (Oct. 30)
- 12:30 US Employment Cost Index. Estimate 0.6%.
*Key releases are highlighted in bold
*All release times are GMT
GBP/USD for Thursday, October 29, 2015
GBP/USD October 29 at 11:05 GMT
GBP/USD 1.5270 H: 1.5274 L: 1.5251
- GBP/USD has shown very little movement in the Asian and European sessions.
- 1.5341 is an immediate resistance line.
- On the downside, 1.5269 is under strong pressure.
- Current range: 1.5269 to 1.5341
Further levels in both directions:
- Below: 1.5269, 1.5163 and 1.5026
- Above: 1.5341, 1.5485, 1.5590 and 1.5660
OANDA’s Open Positions Ratio
GBP/USD ratio has not shown any movement on Thursday. The ratio has a slim majority of short positions (53%), pointing to a slight trader bias towards GBP/USD moving higher.