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
GBP/USD January 20 at 15:45 GMT
GBP/USD 1.6421 H: 1.6453 L: 1.6396
- 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.
- There are no releases out of the UK or the US on Monday