GBP/USD is trading quietly on Tuesday. In the European session, the pair is trading in the mid-1.53 range, taking a break after sharp gains on Monday. It’s a quiet day as far as economic releases, with just three releases on the schedule. British BBA Mortgage Approvals climbed to its best level since February 2012, but still fell short of the estimate. The US releases HPI and the Richmond Manufacturing Index later in the day.
The British pound has dazzled the markets, gaining about five cents in the past two weeks against the retreating US dollar. However, some context is important, as the pair has only recovered about half of its losses which resulted from a terrible slump that started in mid-June. At that time, the pound was enjoying the view below, as it traded in the mid-1.57 range. On Tuesday, BBA Mortgage Approvals climbed from 36.1 thousand to 37.3 thousand. This was the important housing indicator’s best showing since February 2012. However, the markets wanted more, as the estimate stood at 38.5 thousand. Despite falling short of the forecast, the indicator has now risen over four consecutive releases, pointing to stronger activity in the UK housing market.
In the US, the markets will be hoping that the Richmond Manufacturing Index can keep up the pace with last week’s strong manufacturing numbers. Both the Empire State Manufacturing Index and Philly Fed Manufacturing Index looked sharp last week, and another strong manufacturing release would be a positive sign for the US manufacturing sector, which has been a sore spot in the US economy.
In Moscow, the G20 wrapped up a meeting of finance ministers and central bankers on the weekend. Monetary policy was high on the agenda, as the delegates released a statement that future monetary policy moves would be “carefully calibrated and clearly communicated”. This is in response to the recent market turmoil which followed after statements out of the Federal Reserve with regard to QE tapering. The Fed has not always sounded consistent regarding its QE intentions, and predictably, the resulting uncertainty led to all sorts of speculation and rocked the markets. Leaders of the G20 will meet in St. Petersburg in September, and a final draft statement from the Moscow meeting said that a plan to increase jobs and growth and rebalance debt would be ready in time for the September meeting.
GBP/USD for Monday, July 23, 2013
GBP/USD July 23 at 9:20 GMT
GBP/USD 1.5345 H: 1.5356 L: 1.5341
GBP/USD is trading quietly early in the European session. The pair touched a high of 1.5381 but then retracted. GBP/USD continues to receive support at 1.5309. This is not a strong line, and could face pressure if the dollar shows any strength. The next support line is at 1.5203, protecting the 1.52 line. On the upside, the pair faces resistance at 1.5432. This line has held firm since late June. Will the pound continue its sharp rise and put pressure on this line? 1.5527 is the next resistance line.
- Current range: 1.5309 to 1.5432
Further levels in both directions:
- Below: 1.5309, 1.5203, 1.5111, 1.5000, 1.4896 and 1.4781
- Above: 1.5432, 1.5527, 1.5645 and 1.5756
OANDA’s Open Positions Ratio
GBP/USD ratio continues to point to movement in the direction of short positions. We have seen this trend for the past two weeks, when the pound started a sharp rally against the US dollar. Currently, short positions have a thin majority, which has not been the case since the end of June.
The pound has settled down, trading in the mid-1.53 range. Will the pound continue its strong rally, or will we see the dollar bounce back? We could see some activity from the pair later in the day, as the US releases manufacturing data.
- 8:30 British BBA Mortgage Approvals. Estimate 38.5K. Actual 37.3K
- 13:00 US HPI. Estimate 0.9%
- 14:00 US Richmond Manufacturing Index. Estimate 7 points
*Key releases are highlighted in bold
*All release times are GMT
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