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GBP/USD – Pound Gains As BOE Maintains Course

GBP/USD has edged higher on Thursday as the pair flirts with the 1.68 line in the North American session. On the release front, there were no surprises from the Bank of  England, which made no changes to interest rate levels or its QE program. Halifax HPI was outstanding, jumping 3.9% in May. In the US, Unemployment Claims moved higher missed the estimate.

As widely expected, the BOE maintained its monetary course, making no changes to interest rate levels or its asset purchase scheme. The benchmark interest rate remains at 0.50%, while QE continues to be pegged at 375 billion pounds. Speculation has increased about a rate increase as the British recovery deepens. On Wednesday, Services PMI was almost unchanged, coming in at 58.6 points. Earlier in the week, Manufacturing and Construction PMIs came in well above the 50-point level, pointing to strong expansion in the manufacturing and construction sectors.

US employment numbers have not looked sharp so far this week. On Wednesday, ADP Nonfarm Payrolls slipped to 179 thousand, well off the estimate of 217 thousand. Official Nonfarm Payrolls will be released on Friday, and a weak reading could weigh on the US dollar. Meanwhile, Unemployment Claims rose to 312 thousand, up from 300 thousand in the previous reading. The estimate stood at 309 thousand.

US manufacturing and services sectors are pointed in the right direction, according the ISM Business Survey Committee. The ISM Manufacturing and Non-Manufacturing PMIs both improved in May. There was some confusion earlier in the week, as the Manufacturing PMI was based on faulty data, with the original report stating that the manufacturing index had softened in May. This was later corrected, as the index actually improved to 55.4 points in May, up from 54.9 points a month earlier. Meanwhile, the Non-Manufacturing PMI hit a nine-month high last month, climbing to 56.3 points, ahead of the estimate of 55.6 points.

 

GBP/USD for Thursday, June 5, 2014

GBP/USD June 5 at 16:00 GMT

GBP/USD 1.6792 H: 1.6811 L: 1.6723

 

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

A majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar reversing direction and moving higher.

GBP/USD has posted gains on Thursday. 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 [4]

Currency Analyst at Market Pulse [5]
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.