GBP/USD – Pound Slide Continues as US GDP Soars

GBP/USD continues to lose ground on Wednesday, as the pair trades at the 1.69 line in the North American session. The sagging pound has now lost close to 200 points in the past week.  On the release front, US Advance GDP was excellent, jumping 4% in Q2. Elsewhere in the US, ADP Nonfarm Payrolls softened in June, and the Federal Reserve will release a policy statement later in the day. In the UK, today’s sole release is GfK Consumer Confidence, with the markets expecting a slight improvement in the June release.

In the US, Advance GDP soared in Q2, posting a gain of 4.0%. This easily beat the estimate of 3.1%. The boost in economic activity was boosted by strong consumer confidence and business activity in Q2. Meanwhile, ADP Nonfarm Payrolls was unable to keep pace. The key employment indicator dropped to 218 thousand, compared to 284 thousand a month earlier. This was well off the estimate of 234 thousand. If the official Nonfarm Payrolls follows suit with a weak reading, the US dollar could give up its recent gains.

If CB Consumer Confidence is any indication, the US consumer is brimming with optimism about the economy. The key indicator jumped to 90.9 points, crushing the estimate of 85.5 points. This was the indicator’s highest level since September 2007. Consumer confidence is closely tracked by analysts since a confident consumer is likely to increase consumption, which is critical for economic growth.

GBP/USD for Wednesday, July 30, 2014

GBP/USD July 30 at 14:05 GMT

GBP/USD 1.6903 H: 1.6955 L: 1.6889

GBP/USD Technical

• GBP/USD edged lower in the Asian session and lost further ground late in European trade. The pound remains under pressure in the North American session and could dip into 1.68 territory.
• 1.6825 is providing strong support.
• 1.6920 has reverted to a resistance role as the pair trades at lower levels. The round level of 1.7000 is stronger.
• Current range: 1.6825 to 1.6920.

Further levels in both directions:

• Below: 1.6825, 1.6700 and 1.6556
• Above: 1.6920, 1.7000, 1.7183 and 1.7228

OANDA’s Open Positions Ratio

GBP/USD is pointing to gains in short positions in Wednesday trade, reversing the direction seen yesterday. This is consistent with the movement of the pair, as the pound continues to lose ground. A substantial majority of open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar continuing to move higher.

GBP/USD Fundamentals

• 12:15 US ADP Nonfarm Employment Change. Estimate 234K. Actual 218K.
• 12:30 US Advance GDP. Estimate 3.1%. Actual 4.0%.
• 12:30 US Advance GDP Price Index. Estimate 1.8%. Actual 2.0%.
• 14:30 US Crude Oil Inventories. Estimate -0.5M. Actual -3.7M.
• 18:00 US FOMC Policy Statement.
• 18:00 US Federal Funds Rate. <0.25%.
• 23:05 British GfK Consumer Confidence. Estimate 2 points.

* 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.