GBP/USD – Pound Slide Continues Despite Strong GDP Numbers

The British pound continues to lose ground against the US dollar. In Friday’s North American session, GBP/USD was trading in the mid-1.55 range. The pound failed to respond to a couple of strong releases out of the UK. Second Estimate GDP hit a three-month high and Preliminary Business Investment easily beat the estimate. Over in the US, there is just one release on Friday – New Home Sales. As well, the Jackson Hole Summit continues today and will wrap up on Saturday.

British releases have shown improvement recently and there was more good news on Friday. Second Estimate GDP in Q2 climbed 0.7%, up from 0.3% in Q1. This beat the estimate of 0.6%. Preliminary Business Investment, also a quarterly release, posted a gain in Q2 of 0.9%, compared to a decline of -0.4% in Q1. The estimate stood at 0.6%. However, BBA Mortgage Approvals could not keep pace, posting a reading of 37.2 thousand. This fell short of the estimate of 38.8 thousand. Despite the solid economic data, the pound has posted modest losses against the dollar, as the downward trend continues for the third straight day.

There has been a lot of speculation about when the Federal Reserve will taper its QE program, and the markets were hopeful that the release on Wednesday of the FOMC minutes of its most recent policy meeting would shed some light on the Fed’s plans. The minutes didn’t contain any dramatic news, but the US dollar was broadly stronger after their release. Fed officials were described as “broadly comfortable” with plans to taper QE, but remain split on the timing of such a move. The policymakers noted that recent US economic data was “mixed” and all members agreed that it was still too early to scale back the current QE program, under which the Fed purchases $85 billion in assets each month. The markets are anticipating that the Fed will make a move in the near future, and traders should be prepared for a scaling back of QE as early as September.

Meanwhile, the Kansas City Federal Reserve is currently holding its annual economic summit in Jackson Hole, Wyoming. The conference attracts central bankers, finance ministers and academics, and has been a market-mover on previous occasions. Federal Reserve chair Bernard Bernanke will not be attending, but other high-profile Federal Reserve policymakers are participating. The markets are monitoring the conference, hoping for some clues about QE tapering and future monetary policy.


GBP/USD for Friday, August 23, 2013

Forex Rate Graph 15/1/13

GBP/USD August 23 at 13:30 GMT

GBP/USD 1.5549 H: 1.5638 L: 1.5541


GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5309 1.5432 1.5527 1.5645 1.5756 1.5877


GBP/USD remains under pressure and is trading in the mid-1.55 range. The pair pushed higher in the European session and crossed above the 1.56 line. However, it coughed up these gains and then some, later in the session. GBP/USD continues to face resistance at 1.5645. The next line of resistance is at 1.5756. This line has strengthened as the pair trades at lower levels.

On the downside, the GBP/USD is receiving support at 1.5527. This is a weak line, and could be tested if the pound continues to lose ground. This is followed by a strong support level at 1.5432.

  • Current range: 1.5527 to 1.5645


Further levels in both directions:

  • Below: 1.5527, 1.5432, 1.5309 and 1.5203
  • Above: 1.5645, 1.5756, 1.5877, 1.6000 and 1.6071


OANDA’s Open Positions Ratio

The GBP/USD ratio is unchanged in Friday trading. The ratio has an overwhelming majority of short positions, which outnumber long positions by almost 3:1. This reflects a strong bias in favor of the US dollar continuing to post gains against the retreating pound.

The US dollar continues to pressure the pound and has gained close to one cent this week. We could see further movement during the day, as we wrap up the trading week with US New Home Sales, a key release.


GBP/USD Fundamentals

  • 8:30 British Second Estimate GDP. Estimate 0.6%. Actual 0.7%.
  • 8:3o British BBA Mortgage Approvals. Estimate 38.8 thousand. Actual 37.2 thousand.
  • 8:3o British Preliminary Business Investment. Estimate 0.6%. Actual 0.9%.
  • 8:3o British Index of Services. Estimate 0.7%. Actual 0.6%.
  • 14:00 US New Home Sales. Exp. 487K.
  • Day 2 – Jackson Hole Symposium.


*Key releases are highlighted in bold

*All release times are GMT


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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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