The British pound has posted losses in Tuesday trading, as GBP/USD is trading in the mid-1.68 range. On the release front, US Core Retail Sales and Retail Sales missed expectations. The sole British release is a speech by BOE Deputy Governor Jon Cunliffe.
As was widely expected, the Bank of England held the course at its policy meeting last week. The BOE kept its bond-purchase scheme at 375 billion pounds, where it has been pegged since July 2010. As well, interest rates remained at 0.50%, unchanged since March 2009. There has been pressure on the BOE to raise rates as the British recovery continues. Last week, the OECD raised its forecast for UK growth for 2014 from 2.4% to 3.2%. Also, the influential Confederation of British Industry has raised its growth forecasts and said that we could see a rate hike in early 2015. 
US Retail Sales and Core Retail Sales are key gauges of consumer spending, and are carefully tracked by the markets. Both indicators were weak in April. Core Retail Sales dropped to 0.0%, well off the estimate of 0.6%. Retail Sales followed suit, with a paltry gain of just 0.1%, compared to an estimate of 0.5%. The weak numbers could weigh on the US dollar, which has coughed up about 100 points to the Aussie in less than a week.
There were no surprises from Federal Reserve Chair Janet Yellen last week, who gave a cautious thumbs-up to the economic recovery in testimony before Congress. Yellen said that the US economy has improved, but noted two sore spots – the employment market and inflation which remains below the Fed’s target of 2%. Yellen stated that she therefore expects that low interest rate levels will continue to stay low for a “considerable time”. Yellen has stated previously that slack remains in the economy, and the Fed is expected to proceed carefully with future tapers to its QE scheme. Since December, the Fed has trimmed the asset-purchase program by almost half, cutting it to $45 billion each month.
GBP/USD for Tuesday, May 13, 2014
GBP/USD May 13 at 15:15 GMT
GBP/USD 1.6839 H: 1.6883 L: 1.6826
- GBP/USD has posted losses on Tuesday.
- On the upside, 1.6896 is a weak resistance line. The next resistance line is the round number of 1.7000.
- 1.6765 is providing support.
Further levels in both directions:
- Below: 1.6765, 1.6705, 1.6549 and 1.6436
- Above: 1.6896, 1.70, 1.7210, 1.7374 and 1.7538
OANDA’s Open Positions Ratio
GBP/USD ratio is pointing to gains in short positions in Tuesday trading. This is consistent with the movement of the pair, as the pound has posted losses. 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 against the pound.
GBP/USD has posted losses on Tuesday. The US dollar is unchanged in the North American session.
- 8:10 Bank of England Deputy Governor Jon Cunliffe Speaks.
- 11:30 US NFIB Small Business Index. Estimate 94.6 points. Actual 95.2 points.
- 12:30 US Core Retail Sales. Estimate 0.6%. Actual 0.0%.
- 12:30 US Retail Sales. Estimate 0.5%. Actual 0.1%.
- 12:30 US Import Prices. Estimate +0.4%. Actual -0.4%.
- 14:00 US Business Inventories. Estimate 0.4%. Actual 0.4%.
*Key releases are highlighted in bold
*All release times are GMT
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