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GBP/USD – Pound Punches Past 1.59 Line

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 Surprisingly, Summers has withdrawn his nomination, leaving Vice Chairman Janet Yellen as the favored candidate.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

Forex Rate Graph 15/1/13

GBP/USD September 16 at 15:45 GMT

GBP/USD 1.5931 H: 1.5963 L: 1.5916

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5645 1.5756 1.5877 1.6000 1.6125 1.6231

 

 

Further levels in both directions:

 

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.

 

GBP/USD Fundamentals

 

*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 [4]

Market Analyst at OANDA [5]
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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