The pound is having a quiet day, as GBP/USD takes a breather following strong volatility on Thursday and Friday. The pair is in the mid-1.63 range in the North American session. In the US, Existing Home Sales sputtered, as the indicator dropped sharply to 5.05 million last month. There are no UK releases on Monday.
US Existing Home Sales didn’t impress in August, slipping to 5.05 million, compared to 5.15 million in the previous release. This was way off the estimate of 5.21 million. The indicator had exceeded the estimate in the past three releases, so the weak numbers disappointed the markets. We’ll get a look at New Home Sales on Wednesday.
Scottish citizens went to the polls on Thursday in a historic referendum on whether to secede from the United Kingdom. The markets had expected a very close vote, based on polls leading up to the vote. However, at the end of the day, the No side won the vote in convincing fashion, with 55% of the vote, versus 44% for the Yes side. There had been predictions of a financial downturn in the UK if Scotland had voted for independence or if the vote was extremely close. As well, a vote to secede would have raised thorny economic issues such as what currency would be used by an independent Scotland. So, the wee hours of Friday morning brought a tremendous sense of relief in British political and financial circles after the final votes were counted, as the United Kingdom will indeed remain united.
Overshadowed by the focus on the Scottish referendum, British data was a mix on Thursday. British Retail Sales, the primary gauge of consumer spending in the UK, improved last month, posting a gain of 0.4%. However, CBI Industrial Order Expectations came in at -4 points, the worst showing since last September. The markets had expected a gain of 9 points.
The Federal Reserve released a highly-anticipated policy statement on Wednesday. The statement reaffirmed that interest rates would remain ultra-low for a “considerable time” after the asset purchase scheme (QE) ends next month, but surprised the markets in hinting that once a rate hike was introduced, rate levels could move up more quickly than expected. As expected, the Fed trimmed QE by $10 billion/month, and the remaining $15 billion/month is scheduled to be phased out in October.
GBP/USD for Monday, September 22, 2014
GBP/USD September 22 at 14:55 GMT
GBP/USD 1.6336 H: 1.6337 L: 1.6309
- The pound edged higher in the Asian session, but has shown little movement in the European or North American sessions.
- 1.6263 continues to provide strong support.
- On the upside, 1.6382 is an immediate resistance line. 1.6484 is stronger.
- Current range: 1.6263 to 1.6382.
Further levels in both directions:
- Below: 1.6263, 1.6141, 1.6000 and 1.5864
- Above: 1.6382, 1.6484, 1.6605 and 1.6755
OANDA’s Open Positions Ratio
GBP/USD ratio is pointing to gains in long positions on Monday. This is consistent with the pair’s movement, as the pound has posted small gains. The ratio currently has a majority of long positions, indicative of trader bias towards the pound moving to higher ground.
- 14:00 US Existing Home Sales. Estimate 5.21M. Actual 5.05M.
- 14:05 US FOMC Member William Dudley Speaks.
- 23:30 US FOMC Member Narayana Kocherlakota Speaks.
* Key releases are highlighted in bold
*All release times are GMT
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