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GBP/USD – Pound Decline Continues, Dips Below 1.70

GBP/USD continues to lose ground on Thursday. The pair has dropped under the 1.70 line for the first time since late June. On the release front, British Retail Sales improved in June, posting a weak gain of 0.1%. Looking at today’s releases, US Unemployment Claims sparkled, dropping to their lowest level in over eight years. However, New Home Sales dropped sharply in June, well shy of the forecast.

British Retail Sales, the primary gauge of consumer spending, improved to 0.1% in June, compared to -0.5% in the previous release. This was shy of the estimate of 0.2%, and points to weak consumer spending, a critical component of economic growth. On  Wednesday, CBI Realized Sales, which tends to show sharp movement, jumped to 21 points, compared to a previous reading of just 4 points. The estimate stood at 18 points, and was the indicator’s best showing since March. There were no surprises from the BOE, as the votes on QE and interest rate levels were unanimous (9-0) decisions. Any dissenting votes in either decision could have resulted in strong movement by the pound.

Unemployment Claims tumbled last week, as the key indicator fell to 284 thousand, its lowest level since February 2008. This surprised the markets, which had expected a reading of 310 thousand. The strong release continues a string of solid employment data, and the dollar could get a boost from the good news. As well, good news on the employment front is bound to increase speculation about a rate increase by the Federal Reserve.

US housing data was dismal on Thursday, as New Home Sales slumped to a three-month low. The key indicator fell to 406 thousand, compared to 504 thousand in the previous release. The markets were way off in their forecast, with an estimate of 485 thousand. There was much better news earlier in the week, as Existing Home Sales jumped to 5.04 million, surpassing the estimate of 4.94 million. This was the best showing we’ve seen since October.

 

GBP/USD for Thursday, July 24, 2014

GBP/USD July 24 at 15:45 GMT

GBP/USD 1.6982 H: 1.7053 L: 1.6956

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6700 1.6825 1.6920 1.7000 1.7183 1.7228

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

GBP/USD is pointing to gains in long positions in Thursday trade, continuing the direction which has marked the ratio for most of the week. This is not consistent with the movement of the pair, as the pound continues to post losses. A substantial majority of open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar continuing to make inroads against the pound.

 

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]

Market Analyst at OANDA [5]
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

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