GBP/USD – Little Movement as BOE Holds the Course

GBP/USD is calm on Thursday, as the pair trades in the low 1.57 range 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 or QE levels. In the US, Unemployment Claims improved to 297 thousand.

There was good news on the US employment front, as jobless claims improved to 297 thousand, practically matching the forecast. We’ll get a look at the official Nonfarm Employment Change report on Friday, with the markets expecting a strong reading of 231 thousand. If the indicator meets expectations, the US dollar could take advantage and post gains.

In the UK, it was more of the same from the BOE. The benchmark interest rate remained unchanged at 0.50%, where it has been pegged since March 2009. Although the UK economy has shown improvement, inflation remains well below the 2% target and weak Eurozone and global demand has taken its toll on the economy and reduced pressure to raise rates. Quantitative easing remains at 375 billion pounds, unchanged since July 2012.

British Services PMI improved to 58.6 points in November, beating the estimate of 56.6 points. This was a sharp improvement from the previous release of 56.2 points and the strong reading helped the pound post gains against the dollar. On Tuesday, Construction PMI dropped to 59.4 points, the first time it has slipped below the 60-point level since October 2013. This was well short of the estimate of 61.1 points.

 

GBP/USD for Thursday, December 4, 2014

GBP/USD December 4 at 16:30 GMT

GBP/USD 1.5716 H: 1.5725 L: 1.5643

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5392 1.5505 1.5644 1.5717 1.5864 1.6000

 

  • GBP/USD was marked by choppy trading in the Asian and European sessions. The pair has posted gains in the North American session and is testing resistance at 1.5725.
  • On the upside, 1.5717 is under strong pressure. Will the pair break above this line? 1.5864 is stronger.
  • 1.5644 has some breathing room in support as the pair trades at higher levels.
  • Current range: 1.5644 to 1.5717

Further levels in both directions:

  • Below: 1.5644, 1.5505, 1.5392 and 1.5282
  • Above: 1.5717, 1.5864, 1.6000, 1.6141 and 1.6263

 

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Thursday, reversing the direction we saw a day earlier. This is not consistent with the movement of the pair, as the pound has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards the pound moving upwards.

GBP/USD Fundamentals

  • BOE Official Bank Rate. Estimate 0.50%. Actual 0.50%.
  • BOE Asset Purchase Facility. Estimate 375B. Actual 375B.
  • 00:30 US FOMC Member Richard Fisher Speaks.
  • 12:30 US Challenger Job Cuts. Actual -20.7%.
  • 13:30 US Unemployment Claims. Estimate 296K. Actual 297K.
  • 13:30 US FOMC Member Loretta Mester Speaks.
  • 15:30 US Natural Gas Storage. Estimate -51B. Actual -22B.
  • 17:30 US FOMC Member Lael Brainard Speaks.

*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

Currency Analyst at Market Pulse
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.