- MarketPulse - https://www.marketpulse.com -

GBP/USD – Surging Pound Hits Five-Year Highs

GBP/USD continues to look sharp, as the pair trades just below the 1.69 level in the European session. In economic news, British Manufacturing PMI looked very sharp, while US Nonfarm Payrolls jumped in April and surprised the markets.

British releases looked sharp late last week, highlighted by an excellent reading from UK Manufacturing PMI [1]. The index improved to 57.3 points, well above the estimate of 55.4 points. Nationwide HPI, an important gauge of activity in the housing industry, jumped 1.2%, crushing the estimate of 0.6%. There was more good news from Net Lending to Individuals, which posted its strong gain in five years. The indicator came in at GBP 2.9 billion, beating the estimate of 2.3 billion.

As expected, the Federal Reserve trimmed its QE program by $10 billion on Wednesday. This marks the fourth cut since December, reducing the asset purchase scheme to $45 billion/month. The tapers are no longer creating headlines as they did just a few months ago, and the dollar didn’t get any lift against its major rivals. What interested the markets more was the Fed statement that interest rates would remain low for a “considerable time” after QE ends [2]. The markets expect QE to wind up before the end of the year, so we could see a rate hike in early 2015, depending of course, on the strength of the US economy and the job market.

 

GBP/USD for Thursday, May 1, 2014

Forex Rate Graph 21/1/13

GBP/USD May 1 at 15:30 GMT

GBP/USD 1.6894 H: 1.6922 L: 1.6872

 

GBP/USD Technical

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

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions in Thursday trading, reversing the direction seen a day earlier. This is consistent with the movement of the pair, as the pound continues to post gains. A large majority of the open positions in the GBP/USD ratio are short, indicative of the dollar reversing its current downward trend.

The pound has posted gains and is trading just below the 1.69 line. The US dollar remains under pressure 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 [6]

Market Analyst at OANDA [7]
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

Latest posts by Kenny Fisher (see all [6])