GBP/USD is weakening in Tuesday trading. The pair dropped below the all-important 1.60 level in the European session, and continues to edge lower. In economic news, British BBA Mortgage Approvals fell short of the estimate. In the US, CB Consumer Confidence dipped below the 80 level and Richmond Manufacturing Index slumped badly.
In the US, the first key release of the week was a disappointment. CB Consumer Confidence dropped from 81.5 to 79.7 points in August, shy of the estimate of 79.9 points. It was the first time the indicator has dropped below the 80-point level since May. There was more bad news in the manufacturing sector, as the Richmond Manufacturing Index plunged from 14 points down to zero in August. This surprised the markets, which had expected a reading of 17 points. The markets will be looking for a turnaround from additional manufacturing data on Wednesday, with the release of Core Durable Goods Orders and Durable Goods Orders.
The markets have settled down after the US Federal Reserve stunned the markets in deciding not to taper QE at its policy meeting last week. Most analysts had expected the Fed to announce a scaling down of the present bond-buying program of $85 billion/mth by $10-15 billion. However, the Fed was of the opinion that US economic data, particularly employment numbers, did not justify scaling down QE at this time. After the FOMC Statement, Federal Reserve Bank of St. Louis President James Bullard shed some light on the dramatic move (or lack of) by the Federal Reserve. Bullard said the vote was close, but weaker US numbers led to a decision not to taper. He added that the Fed may go ahead with “small” reductions to QE at its next policy meeting in October.
As British releases continue to look solid, the Bank of England is showing cautious optimism about the UK economy. The BOE said that the recovery is “taking hold” and has increased its growth forecast for this quarter from 0.5% to 0.7%. On Monday, Monetary Policy Committee member Ben Broadbent reiterated this sentiment and noted that recent economic data had been strong. The pound’s rally has hit a few bumps in the past few days, but even so the currency has enjoyed a terrific September, gaining around five cents against the US dollar this month.
GBP/USD for Tuesday, September 24, 2013
GBP/USD September 24 at 15:00 GMT
GBP/USD 1.5987 H: 1.6042 L: 1.5992
- GBP/USD is trading in the high-1.59 range in Tuesday trading. The pair lost ground in the European session, dropping below the 1.60 line.
- The pair is receiving support at 1.5877. This followed by a support level at 1.5756.
- On the upside, the pair is facing resistance at the round number of 1.6000. This weak line could see more pressure during the North American session. This is followed by support at 1.6125. This line has remained intact since December 2012.
- 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, 1.6300 and 1.6421
OANDA’s Open Positions Ratio
The GBP/USD ratio has reversed directions and is showing movement towards short positions in Tuesday trading. This is reflected in the pair’s current movement, as the pound has lost ground to the US dollar. The ratio is comprised of a majority of short positions, which reflects a strong bias in favor of the US dollar continuing to post gains against the pound.
The pound is under pressure from the US dollar and has dropped below the critical 1.60 line. With the US posting a weak consumer confidence release, we could see the pair settle down and remain close to the 1.60 level.
- 8:30 British BBA Mortgage Approvals. Estimate 38.6K. Actual 38.2K.
- 10:30 Bank of England MPC Member David Miles Speaks.
- 12:45 Bank of England MPC Member Paul Tucker Speaks.
- 13:00 US S&P/CS Composite-20 HPI. Estimate 12.5%. Actual 12.5%.
- 13:00 US HPI. Estimate 0.9%. Actual 1.0%.
- 14:00 US CB Consumer Confidence. Estimate 79.9 points. Actual 79.7 points.
- 14:00 US Richmond Manufacturing Index. Estimate 17 points. Actual 0 points.
- 17:00 US FOMC Member Esther George Speaks. George is hawkish in stance.
- 17:00 Bank of England MPC Member Charles Bean Speaks.
*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.