GBP/USD – Steady in Holiday Trade

GBP/USD has edged higher on Monday, as the pair is trading in the mid-1.68 range in the North American session. Trading volume is light as markets in both the US and the UK are closed for holidays, so there are no releases until Tuesday.

US employment releases disappointed on Thursday. Unemployment Claims has looked sharp over the past two releases, but the short streak came to an end, as the key employment indicator climbed to 326 thousand, up from 297 thousand a week earlier. This missed the estimate of 312 thousand. With future QE tapers by the Federal Reserve contingent on solid economic data, key employment releases such as Unemployment Claims will continue to be closely scrutinized by the markets. Elsewhere, key housing data was a mix, as Existing Home Sales fell short of expectations, while New Home Sales improved sharply in April and easily beat the estimate.

The Federal Reserve minutes were released on Wednesday, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates, but the minutes didn’t provide a timetable as to when rates might go up, and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.

British Second Estimate GDP is often a market-mover, but this time the pound failed to take advantage of another strong reading. The indicator posted a healthy gain of 0.8% in Q1, matching the forecast and keeping in line with the past three readings. The GDP release is another indication that the British economy is recovering at a good clip, so speculation about a rate hike from the BOE will continue to pre-occupy the markets.

GBP/USD for Monday, May 26, 2014

GBP/USD May 26 at 15:00 GMT

GBP/USD 1.6846 H: 1.6853 L: 1.6827

GBP/USD Technical

• GBP/USD has edged higher in Monday trade.
• On the upside, 1.6896 is providing resistance. The key level of 1.70 is stronger.
• 1.6765 is a strong support line.

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 long positions in Monday trade. This is consistent with the movement of the pair, as the pound has edged higher. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar posting gains against the pound.

GBP/USD is steady on Monday. In the North American session, the pair has edged upward.

GBP/USD Fundamentals

* There are no UK or US releases 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.