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GBP/USD – Pound Fluctuates As US GDP Sparkles

The British pound is showing some volatility on Thursday. In the North American session, GBP/USD has moved higher and is trading in the high-1.60 range. In economic news, US Advance GDP was up sharply. Unemployment Claims also looked good, as the key employment indicator dipped lower last week, matching the forecast. In the UK, the Bank of England elected to maintain the interest rate and asset purchases facility levels.

There were no surprises from the BOE earlier on Thursday. The benchmark interest rate was kept at 0.50%, while asset purchase facility was maintained at 375 billion pounds. With the UK economy continuing to pick up steam, no changes were expected. The BOE has pegged interest rates at 0.50% since 2009. BOE head Mark Carney has said that the Bank would not lower rates before the unemployment rate falls below 7.0%. Currently, unemployment is at 7.7%. The BOE is forecasting that we won’t reach that point prior to 2016, but with the British economic indicators continuing to point upwards, many investors feel that this target will be reached much sooner.

US key releases continue to enjoy a strong week. Advanced GDP jumped 2.8% in Q3, hitting its highest levels since Q4 of 2011. The estimate stood at 2.0%, so the US economy is expanding faster than anticipated by the markets. Unemployment Claims dropped slightly last week, coming in at 336 thousand. This was the strongest release in five weeks. We’ll get another look at key employment data on Friday, as the US releases Non-Farm Payrolls. The markets are expecting a weak October release of 120 thousand, but the release is expected to be abnormally low due to layoffs during last month’s government shutdown.

British economic data continues to impress the markets. Manufacturing Production gained 1.2%, recovering nicely from a 1.2% decline last month. Industrial Production also looked sharp, rebounding from a decline of -1.1% in September, with a gain of 0.9% in October. There was more good news from Halifax HPI, which jumped from 0.3% to 0.7%, a three-month high. These strong gains point to continuing improvement in the UK economy, and the pound has taken advantage as it trades above the key 1.60 level. The British currency is enjoying an impressive run and has appreciated 5.6% against the US dollar since July.


GBP/USD for Thursday, November 7, 2013

Forex Rate Graph 21/1/13

GBP/USD November 7 at 16:25 GMT

GBP/USD 1.6076 H: 1.6092 L: 1.6010


GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5756 1.5877 1.6000 1.6125 1.6231 1.6300



Further levels in both directions:


OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in Thursday trading. This is reflected in the current movement of the pair, as the pair has been fluctuating but has been unable to sustain momentum in either direction. Short positions continue to dominate the open positions, reflecting a trader bias towards the US dollar moving to higher ground.

The pound is showing some volatility on Thursday, and we could see this continue in the North American session.


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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