GBP/USD Dollar Steady As Markets Await Fed Minutes

GBP/USD has posted slight losses on Wednesday, as the pair trades in the low-1.71 range in the North American session. In the US, all eyes are on the release of the FOMC minutes later in the day. Over in the UK, Halifax HPI disappointed with a decline in June.

All eyes are on the Federal Reserve on Wednesday, as the FOMC releases the minutes of its June policy meeting. The markets would love some clarity as to when the Fed is looking to raise interest rates. Any hints in this regard could send the currency markets scrambling. Based on updated Fed forecasts for inflation and unemployment, it’s safe to say that the Fed is cautiously optimistic about the pace of the US recovery.

British Manufacturing Production was dismal last month, coming in at -1.3%. This was well off the estimate of +0.4%, and the sharpest decline since last April. Industrial Production followed suit, posting a decline of 0.7%, which was well off the estimate of a 0.4% gain. Last week’s manufacturing PMI was steady, but Tuesday’s weak numbers raise concerns about the health of the UK manufacturing sector.

US employment numbers continue to look sharp. On Tuesday, JOLTS Job Openings jumped to 4.64 million, easily beating the estimate of 4.53 million. This follows excellent figures from Nonfarm Payrolls and Unemployment Rate. Nonfarm Payrolls, one of the most important indicators, bounced back in June with a strong gain of 288 thousand new jobs. This crushed the estimate of 214 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be under the market microscope.

GBP/USD for Wednesday, July 9, 2014

GBP/USD July 9 at 16:20 GMT

GBP/USD 1.7124 H: 1.7146 L: 1.7094

GBP/USD Technical

• GBP/USD lost ground late in the Asian session and continued to soften in the European session, dropping below the 1.71 line. The pair has rebounded in North American trading.
• 1.7000 continues to provide strong support.
• 1.7183 is the next resistance line. This is followed by 1.7228, which has held firm since October 2008.
• Current range: 1.7000 to 1.7183.

Further levels in both directions:

• Below: 1.7000, 1.6920, 1.6825 and 1.6700
• Above: 1.7183, 1.7228, 1.7383 and 1.7482

OANDA’s Open Positions Ratio

GBP/USD is pointing to gains in long positions in Wednesday trade. This is not consistent with the movement of the pair, as the pound has posted slight losses. A substantial majority of open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar moving higher.

GBP/USD Fundamentals

• 6:44 British Halifax HPI. Estimate -0.6%. Actual -0.3%.
• 14:30 US Crude Oil Inventories. Estimate -1.7M. Actual -2.4M.
• 17:01 US 10-year Bond Auction.
• 18:00 US FOMC Meeting Minutes.

*Key releases are highlighted in bold

*All release times are GMT

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