GBP/USD – Pound Limping at 1.22, US Unemployment Claims Sparkles

GBP/USD is showing little movement on Thursday. In the North American session, the pair is trading at the 1.22 line. On the release front, US unemployment claims had another excellent outing, dropping to 246 thousand. There are no UK releases on Thursday. On Friday, we could see some movement on the currency markets, as the US releases inflation, retail sales and consumer confidence numbers.

US unemployment claims continue to sparkle, pointing to red-hot US labor market. The key indicator dropped to 246 thousand last week, down slightly from 249 thousand a week earlier. The estimate stood at 252 thousand, marking a tenth consecutive week that the indicator has beaten the forecast. Strong job numbers is one of the main arguments of proponents of a rate hike in December, as the labor market, which is close to capacity, continues to fuel steady economic growth.

On Wednesday, the Federal Reserve released the minutes of its last policy meeting. The minutes contained no dramatic news, but point to deep divisions in the FOMC over monetary policy. This was already apparent in the September rate vote, when three members voted against the decision to maintain rates at 0.25 percent. The minutes indicated that some of the members who voted to hold rates chose to fall in line with Janet Yellen, but are in favor of raising rates “relatively soon”. This means that Yellen will face a tough battle if she wants to hold off a rate in December, given that there is significant support for rate hike in December. The markets have priced in a December hike at 66 percent and the positive sentiment could help the US dollar continue to move higher. The Fed will next meet in November, but analysts don’t expect a move just a week before the presidential election.

With Britain poised to leave the EU following the Brexit vote in June, the two sides will have to sit down and haggle over the myriad of details that will come with the historic breakup. A likely sticking point will be the question of the EU budget liabilities and what constitutes Britain’s portion. The EU estimates shared liabilities of over EUR 300 billion and that Britain will have to assume EUR 20 billion. Britain, for its part, is unlikely to simply pay this bill, and a deadlock over this issue could derail a new trade deal between the UK and the continent, ultimately hurting the Eurozone and UK economies.

GBP/USD Fundamentals

Thursday (October 13)

  • 8:30 US Unemployment Claims. Estimate 252K. Actual 246K
  • 8:30 US Import Prices. Estimate 0.1%. Actual 0.1%
  • 10:30 US Natural Gas Storage. Estimate 84B. Actual 79B
  • 11:00 US Crude Oil Inventories. Estimate 0.4M
  • 13:01 US 30-year Bond Auction

Friday (October 14)

  • 8:30 US Core Retail Sales. Estimate 0.4%
  • 8:30 US PPI. Estimate 0.2%
  • 8:30 US Retail Sales. Estimate 0.6%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 92.1
  • 13:30 US Federal Chair Janet Yellen Speaks
  • Tentative- BoE Governor Mark Carney Speaks

*All release times are EDT

* Key events are in bold

GBP/USD for Thursday, October 13, 2016

GBP/USD October 13 at 11:00 EDT

Open: 1.2186 High: 1.2218 Low: 1.2130 Close: 1.2195

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.1844 1.1954 1.2120 1.2447 1.2525 1.2612
  • GBP/USD has shown limited movement in the Thursday session
  • 1.2120 is providing support
  • There is resistance at 1.2447

Further levels in both directions:

  • Below: 1.2120, 1.1954 and 1.1844
  • Above: 1.2447, 1.2525 and 1.2612
  • Current range: 1.2120 to 1.2447

OANDA’s Open Positions Ratio

GBP/USD ratio is showing long positions with a solid majority (60%). This is indicative of trader bias towards GBP/USD continuing to move to higher ground.

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.