GBP/USD – Pound Dips After BOE Minutes

GBP/USD has reversed directions on Wednesday, dipping below the 1.68 line. In UK releases, the BOE minutes from its last policy meeting pointed to disagreements over the economy. Public Sector Net Borrowing pointed to a smaller deficit, while Industrial Order Expectations dropped sharply. In the US, New Home Sales slipped badly, dropping to an eight-month low.

There is no arguing that the British economy has enjoyed a strong recovery, but that does not mean that policymakers at the BOE see eye-to-eye on the health of the economy or inflation. The minutes of the previous policy meeting indicated that Monetary Policy Committee members were “uncertain” about the amount of spare capacity in the economy and the medium-term inflation outlook. Importantly, the MPC voted unanimously to maintain the benchmark interest rate at 0.50%. With the unemployment rate down to 6.9%, there is growing speculation that we could see a rate hike as early as next spring, although the BOE has done its best to dampen expectations of a rate increase.

In the US, New Home Sales was a disaster, as the key indicator plunged to 384 thousand in March, down from 440 thousand in the previous release. The weak reading was nowhere near the estimate of 455 thousand, and marked an eight-month low for the key housing indicator. The housing sector is showing signs of weakness, as both New Home Sales and Existing Home Sales have been on a sustained downward trend.

The markets haven’t reacted to events in Ukraine so far, but that could change if the violence in the east of the country worsens. Russian President Vladimir Putin has threatened to act on his “right” to invade Ukraine, and has also given the country an ultimatum regarding its gas debt. The gas supply from Russia to western Europe is in danger, and if the situation spills out of control, we could see a sharp response from the markets. US Vice-President Joe Biden is in Kiev for a symbolic visit. The West doesn’t have many cards to play against Russia, so every move by Putin will be scrutinized and could impact on the markets.


GBP/USD for Wednesday, April 23, 2014

Forex Rate Graph 21/1/13

GBP/USD April 23 at 14:30 GMT

GBP/USD 1.6788 H: 1.6836 L: 1.6781


GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6549 1.6705 1.6765 1.6896 1.7000 1.7210


  • GBP/USD has dropped below the 1.68 line, wiping out Tuesday’s gains.
  • 1.6765 has weakened as the pound has lost ground. The next support line is 1.6705, which is protecting the 1.67 line.
  • 1.6896 is a strong resistance line, protecting the key 1.70 level.

Further levels in both directions:

  • Below: 1.6765, 1.6705, 1.6549 and 1.6416
  • Above: 1.6896, 1.70, 1.7210 and 1.7374.


OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Wednesday. This is consistent with the movement of the pair, as the pound has posted losses against the dollar. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar continuing to post gains.

The pound has lost ground on Wednesday. The pound remains under pressure in the North American session.


GBP/USD Fundamentals

  • 8:3o MPC Asset Purchase Facility Votes. Estimate 0-0-9. Actual 0-0-9.
  • 8:3o MPC Official Bank Rate Votes. Estimate 0-0-9. Actual 0-0-9.
  • 8:30 British Public Sector Net Borrowing. Estimate GBP 8.9 billion. Actual GBP 4.9 billion.
  • 10:00 British CBI Industrial Order Expectations. Estimate +7 points. Actual -1 point.
  • 13:45 US Flash Manufacturing PMI. Estimate 56.2 points. Actual 54.4 points.
  • 14:00 US New Home Sales. Estimate 455K. Actual 384K.
  •  14:30 US Crude Oil Inventories. Estimate 2.6M. Actual 3.5M.

*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

Market Analyst at OANDA
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, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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