GBP/USD – Pound Gains Ground As US Retail Sales Falter

GBP/USD has posted gains in Friday trading, with the pair climbing to the mid-1.58 range. The pound took advantage of weak US data, as Core Retail Sales and Retail Sales both fell short of their estimates. On Thursday, US Unemployment Claims dropped sharply, but this was apparently due to technical issues in counting claims. Later on, the US releases UoM Consumer Sentiment. There are no UK releases on Friday.

US retail sales numbers did not impress on Friday. Retail Sales posted a weak gain of 0.2% for the second straight month. This was well below the estimate of 0.5%. Core Retail Sales did not fare any better, dropping from a 0.5% gain in July to just 0.1% in August. The estimate stood at 0.3%. US Core PPI brought better news, posting a 0.3% gain in August, compared to a flat 0.0% reading in July. This edged out the estimate of 0.2%. The pound pushed higher on the news and has gained resumed its upward march which we have seen for most of this week.

US Unemployment Claims pointed to a sharp decline for the August release. However, a Department of Labor spokesman said that the drop was due to computer upgrades in two states, which meant that not all claims were processed. Even so, unemployment claims are looking positive. The four-week average, which is a less volatile gauge of unemployment claims, dropped to 321,000, its lowest level since 2007. If employment data continues to improve, we could see the Fed pull the tapering trigger sooner rather than later.

The Syrian crisis has taken on a new twist, as US military action, which seemed a foregone conclusion in late August, is currently on the backburner. The US and Russia are spearheading intensive efforts to come up with a diplomatic solution to the crisis. Under the proposed plan, Syria would hand over its entire arsenal of chemical weapons to the international community to be destroyed. Speaking on US television earlier in the week, President Obama said that he would delay any military action as long as a diplomatic solution was possible, but that a strike against Syria was still on the table. If the diplomatic efforts gain momentum and the crisis eases, we could see the safe-haven dollar lose ground.

 

GBP/USD for Friday, September 13, 2013

Forex Rate Graph 15/1/13

GBP/USD September 13 at 13:05 GMT

GBP/USD 1.5867 H: 1.5869 L: 1.5803

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5527 1.5645 1.5756 1.5877 1.6000 1.6125

 

  • GBP/USD has resumed its upward movement in Friday trading.
  • The pair is testing resistance at 1.5877. This is followed by resistance at the significant line of 1.6000. This line has remained intact since January.
  • On the downside, the GBP/USD is receiving support at 1.5756. This line has strengthened as the pair trades at higher levels. This is followed by support at 1.5645.
  • Current range: 1.5756 to 1.5877

 

Further levels in both directions:

  • Below: 1.5756, 1.5645, 1.5527, 1.5432 and 1.5309
  • Above: 1.5877, 1.6000 and 1.6125 and 1.6231

 

OANDA’s Open Positions Ratio

The GBP/USD ratio is unchanged in Friday trading. This is not reflected in the pair’s current movement, as the pound has gained ground against the dollar. The ratio is comprised of a majority of short positions, which reflects a strong bias in favor of the US dollar reversing direction and posting gains against the pound.

The pound has moved higher after weak US retail sales data. We could see more movement from the pair during the day, with the US releasing key consumer confidence numbers.

 

GBP/USD Fundamentals

  • 12:30 US Core Retail Sales. Estimate 0.3%. Actual 0.1%.
  • 12:30 US Retail Sales. Estimate 0.5%. Actual 0.2%.
  • 12:30 US PPI. Estimate 0.2%. Actual 0.3%.
  • 12:30 US Core PPI. Estimate 0.2%. Actual 0.0%.
  • 13:55 US Preliminary UoM Consumer Sentiment. Estimate 82.6 points.
  • 13:55 US Preliminary UoM Inflation Expectations.
  • 14:00 US Business Inventories. Estimate 0.4%.

 

*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 Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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