GBP/USD edged higher following the release of positive UK data on Thursday. Public Sector Net Borrowing posted its best numbers in nine months, while Industrial Order Expectations beat expectations. In the US, key releases largely disappointed the markets. Unemployment Claims were well above the forecast, and the Philly Fed Manufacturing Index posted a sharp decline. Existing Home Sales managed to beat the estimate, while Core CPI was within expectations.
The markets had plenty of numbers to crunch on Thursday, with a host of releases from the US and the UK. Public Sector Net Borrowing was sharp, posting a surplus for the first time since August 2012, and beating the estimate as well. The surplus hit 9.9 billion pounds, well above the estimate of 9.0 billion. CBI Industrial Order Expectations showed improvement to -14 points, higher than the estimate of -16. In the US, Unemployment Claims shot up to 362 thousand, well above the estimate of 353 thousand. The Philly Fed Manufacturing Index looked awful, plunging to -12.5 points, its worst showing since July 2012. The markets had expected the index to move into positive territory, with a forecast of 1.1 points. Existing Home Sales beat the forecast of 4.89 million, with a reading of 4.92 million. On the whole, US releases looked bad, as the markets continue to ponder in which direction the US economy is headed.
Late Wednesday, the Federal Reserve released the minutes of its most recent FOMC meeting. At the meeting, there was discussion of winding down the current round of QE due to concern about the negative effect that QE could have on the financial markets. Previously, the Fed had stated that it expected to continue with QE until unemployment dropped to 6.5%. The Fed has been purchasing a record amount of assets since December, kept its key interest rate close to zero and expanded its balance sheet to over $3 trillion, but the US economy has not responded as quickly as hoped. Thursday’s disappointing employment and manufacturing numbers out of the US underscores the fact that the road to recovery remains a bumpy one.
GBP/USD for Thursday, Feb 21, 2013
GBP/USD Feb 21 at 16:00 GMT
1.5257 H: 1.5272 L: 1.5133
The pound continues to struggle to find its footing, and GBP/USD is showing volatility, as the pair dropped sharply before bouncing back to the mid-1.52 range during the European session. On the downside, 1.5203 is providing support. This line has already been breached today, and cannot be considered safe. There is stronger support at 1.5138. GBP/USD is facing resistance at 1.5309. This is followed by the resistance line of 1.5395, which is protecting the 1.54 level.
- Current range: 1.5203 to 1.5309.
Further levels in both directions:
- Below: 1.5203, 1.5180 and 1.5053, 1.4988 and 1.4880.
- Above: 1.5309, 1.5395, 1.5481, 1.5565, 1.5685, 1.5792 and 1.5854.
OANDA Open Positions Ratios
The GBP/USD ratio is pointing to movement towards the short positions. This activity is consistent with what we saw earlier today, as the pound dropped all the way down to the 1.5130 range, before retracting. However, trader sentiment remains strongly biased towards open long postions, signalling an expectation for the pound to rebound and post gains against the US dollar.
The pound has been having another tough week, but we have seen some positive UK data, notably Unemployment Claims and the Public Sector Trade Balance. The markets continue to be concerned with the health of the British economy, but if UK inidicators continue to point upward, the pound should be a prime beneficiary.
- 9:30 British Public Sector Net Borrowing. Estimate -9.0B. Actual -9.9B.
- 10:38 British 10-year Bond Auction. Actual 2.15%.
- 11:00 British CBI Industrial Order Expectations. Estimate -16 points. Actual -14 points.
- 13:30 US Core CPI. Estimate 0.2%. Actual 0.3%.
- 13:30 US Unemployment Claims. Estimate 353K. Actual 362K.
- 13:30 US CPI. Estimate 0.1%. Actual 0.0%.
- 14:00 US Flash Manufacturing PMI. Estimate 55.6 points. Actual 55.2 points.
- 15:00 US Existing Home Sales. Estimate 4.89M. Actual 4.92M.
- 15:00 US Philly Fed Manufacturing Index. Estimate 1.1 points. Actual -12.5 points.
- 15:00 US Mortgage Delinquencies. Actual 7.09%.
- 15:00 US CB Leading Index. Estimate 0.2%. Actual 0.2%.
- 15:30 US Natural Gas Storage. Estimate -119B. Actual -127B.
- 16:00 US Crude Oil Inventories. Estimate 1.9M. Actual 4.1M.
- 17:30 US FOMC James Bullard Speaks.
*Key releases are highlighted in bold
*All release times are GMT
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