GBP/USD continues to hammer away at the US dollar, and crossed above the 1.59 line in early Monday trading. The pair is currently trading at its highest levels since mid-January. There was dramatic news as former Treasury Secretary Lawrence Summers announced that he would not be seeking to replace Federal Reserve head Bernard Bernanke. In Monday releases, US Empire State Manufacturing Index dropped sharply and posted a four-month low. In the UK, Rightmove HPI disappointed, posting a second straight decline. The BOE will release its Quarterly Bulletin later on Monday.
Bernard Bernanke will step down as head of the US Federal Reserve at the end of January, and the race to replace Bernanke has taken a dramatic twist. Former Treasury Secretary Lawrence Summers was considered the leading contender for the prestigious position. Surprisingly, Summers has withdrawn his nomination, leaving Vice Chairman Janet Yellen as the favored candidate. Yellen is considered dovish and may be hesitant when it comes to QE tapering. The dollar responded to the news of Summers’ withdrawal by losing ground against the major currencies.
US releases have run into some turbulence, and UoM Consumer Sentiment looked awful on Friday. The key indicator dropped from 80.0 points in July to 76.8 in August, its lowest level since March. This weak figure comes on the heels of weak US retail sales releases on Thursday. The new week didn’t start out much better, as Empire State Manufacturing Index, an important release, posted another sharp drop in August. The indicator fell from 8.2 points to 6.3 points. This was way off the estimate of 9.2 points. The markets are hoping that the US can get back on track on Tuesday, with the release of Core CPI, a key event.
In the UK, BOE Governor Mark Carney has tried to use forward guidance and promise anyone who listens that he will not raise interest rates for another three years. However, many investors don’t buy what Carney is selling, and believe that the BOE will raise rates by the middle of 2o15. With the UK economy continuing to pick up steam, it’s not hard to see why Carney is having a tough time convincing the business community that rates will not rise until 2o16. If the economy continues to improve, it will be interesting to see if Carney maintains his stance on interest rates.
GBP/USD for Monday, September 16, 2013
GBP/USD September 16 at 15:45 GMT
GBP/USD 1.5931 H: 1.5963 L: 1.5916
- GBP/USD has posted gains in Monday trading. The pair touched a high of 1.5963 in the European session, but has edged lower.
- The pair is testing resistance at the round number of 1.6000. This is followed by resistance at the significant line of 1.6125. This line has remained intact since January.
- On the downside, the GBP/USD is receiving support at 1.5877. This is followed by a strong support level at 1.5756.
- Current range: 1.5877 to 1.6000
Further levels in both directions:
- Below: 1.5877, 1.5756, 1.5645, 1.5527 and 1.5432
- Above: 1.6000, 1.6125, 1.6231 and 1.6300
OANDA’s Open Positions Ratio
The GBP/USD ratio is unchanged in Monday trading. This is reflected in the pair’s current movement, as the pound has settled down and is trading quietly. 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 is looking sharp as it trades above the 1.59 line. There are no major releases out of the US on Monday, so we could see an uneventful North American session for GBP/USD.
- 12:30 US Empire State Manufacturing Index. Estimate 9.2 points. Actual 6.3 points.
- 13:15 US Capacity Utilization Rate. Estimate 77.8%. Actual 77.8%.
- 13:15 US Industrial Production. Estimate 0.5%. Actual 0.4%.
- 23:01 Bank of England Quarterly Bulletin.
*Key releases are highlighted in bold
*All release times are GMT
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