GBP/USD – Little Movement in Thin Holiday Trade

With the US markets closed for the Martin Luther King holiday, it’s been a listless Monday for the US dollar. In Monday’s North American session, GBP/USD is trading quietly in the low-1.64 range. On Friday, US construction and employment data met expectations, but consumer confidence dipped. Monday’s trade has been light, as US markets are closed for the Martin Luther King holiday. There are no British releases on Monday.

The UK wrapped up last week in fine style, as Retail Sales looked brilliant, posting a gain of 2.6% in December. We haven’t seen such a strong jump since October 2004. This easily beat the estimate of 0.5%, and was well above last month’s rise of 0.3%. The whopping gain will likely revive speculation about a possible interest rate hike by the Bank of England. Although Governor Mark Carney has done his best to pour cold water on the idea, the improving UK economy is increasing pressure on the BOE to respond with a rate increase. The excellent Retail Sales reading gave the pound a boost on Friday, but GBP/USD still closed the week down almost a cent.

Weak inflation levels in the US remain a concern, as this is an indication of an underperforming economy. This was underscored by Core CPI, which posted a weak gain of just 0.1% in December. On Tuesday, the Producer Price Index posted a gain of 0.4%, reversing directions after three consecutive declines. On Wednesday, Chicago Fed President Charles Evans said that the low rate of U.S. inflation is “both puzzling and worrisome,” and enough reason to maintain low interest rates, even if the employment picture continues to brighten.

 

GBP/USD for Monday, January 20, 2014

Forex Rate Graph 21/1/13

GBP/USD January 20 at 15:45 GMT

GBP/USD 1.6421 H: 1.6453 L: 1.6396

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6231 1.6329 1.6416 1.6549 1.6705 1.6964

 

  • GBP/USD is listless in thin trade on Monday.
  • On the downside, 1.6416 is under strong pressure and could break during the North American session. This is followed by strong support at 1.6329.
  • 1.6549 is providing strong resistance. This is followed by resistance at 1.6705, which has held firm since May 2011.
  • Current range: 1.6416 to 1.6549

 

Further levels in both directions:

  • Below: 1.6416, 1.6329, 1.6231, 1.6125 and 1.6000
  • Above: 1.6549, 1.6705, 1.6964 and 1.7182

 

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in Monday trading. This is reflected in what we’re seeing from the pair, as GBP/USD is showing little movement. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar breaking out and moving to higher ground.

After strong gains on Friday, the pound is trading quietly in thin trade to start off the week. With US markets closed for a holiday, we could be in for an uneventful North American session.

 

GBP/USD Fundamentals

  •  There are no releases out of the UK or the US on Monday

 

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

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.