GBP/USD – Unsteady as Pound Tests 1.54 Line

The pound is showing some movement as we begin the new trading week. GBP/USD dropped to the mid-1.53 range in the European session, but has recovered in North American trading, and is back above the 1.54 level.

The US dollar got a strong boost last week, as Federal Reserve chair Bernard Bernanke signaled that QE would likely be scaled down in 2013, and could be terminated in 2014, if growth and employment numbers continue to improve The Fed said that it expects the economy to grow and unemployment to fall, which will allow the scaling back of QE. It should be remembered that the Federal Reserve is not making any changes at present to QE, which involves bond purchases of $85 billion each month by the Fed. Bernanke’s comments bolstered the dollar against the major currencies, including the pound, as winding up QE is dollar-positive.

In the UK, there were no surprises as BOE Governor Mervyn King presided over his final policy meeting last week. The BOE released the minutes of the most recent policy meeting of the MPC, which is responsible for the interest rate and asset purchases (QE) decisions. The voting breakdown of the MPC members, which can be a market-mover, yielded no surprises. The vote on maintaining the interest rate at 0.50% was unanimous, in contrast to the QE decision, which passed by a 6-3 vote. BOE Governor King voted with two other members to increase QE to GBP400 billion, but the majority opted to maintain the current levels of GBP375 billion. This breakdown was identical to the pattern at the previous meeting, and was expected by the market, so the release of the minutes did not affect GBP/USD.

The Eurozone is the UK’s largest trade partner, so developments in the Eurozone, both good and bad, can have a major impact on the UK and the British pound. The Eurozone economy continues to sputter, and there are serious concerns about the health of the German economy. Long considered the locomotive of Europe, the largest economy in the Eurozone continues to churn out weak data. Last week, German Manufacturing PMI remained under the 50-point level, indicating contraction in the manufacturing sector. German PPI also disappointed, posting a decline of -0.3%. On  Monday, German Ifo Business Climate, a key indicator, came in at 105.9 points, just short of the estimate of 106.0. These numbers point to weakness in the German economy, and  if Germany does not lead the way to recovery, the Eurozone will have a very tough time pulling out of the current recession.


GBP/USD for Monday, June 24, 2013

Forex Rate Graph 15/1/13

GBP/USD June 24 at 13:45 GMT

GBP/USD 1.5419 H: 1.5432 L: 1.5344


GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5111 1.5203 1.5309 1.5432 1.5557 1.5700


GBP/USD is trading slightly above the 1.54 line in Monday trading. The pair is receiving strong support at 1.5309, protecting the 1.53 level. On the upside, there is resistance at 1.5432. This weak line was tested earlier in the day, and could see more activity as the pair continues to show movement. This is followed by strong resistance at 1.5557.

  • Current range: 1.5309 to 1.5432


Further levels in both directions:

  • Below: 1.5309, 1.5203, 1.5111 and 1.5000
  • Above: 1.5432, 1.5557, 1.5700, 1.5800, and 1.5869


OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged as we start off the new trading week. This is not reflected in the pair, which is showing some movement. We can expect the ratio to swing into action if GBP/USD continues to show activity. Short positions continue to retain a solid majority, indicating a strong bias towards the GBP/USD moving in a downward direction.

There was plenty of activity in the markets last week, and the pound sustained sharp losses against the broadly stronger dollar. The pair is currently trading close to the 1.54 level, and we could see the pair stay close to this line, as there are no releases from the UK or US on Monday. We can expect a busier day on Tuesday, with key releases scheduled from both countries.

GBP/USD Fundamentals

  • There are no releases from the UK or US on Monday.


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.
Kenny Fisher

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