GBP/USD – Calm Ahead of Key US Job Numbers

GBP/USD lost ground earlier on Friday but has since recovered. In the European session, the pair is trading slightly below the 1.57 line. On the release front, today’s sole UK release is a minor one, Consumer Inflation Expectations. In the US, it promises to be much busier, with three key events on the calendar, led by Nonfarm Employment Change. The markets are expecting a strong reading from this market-mover, with the estimate standing at 231 thousand. As well, the US will release the Unemployment Rate and Trade Balance.

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, there were no surprises from the BOE on Thursday. 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 Friday, December 5, 2014

GBP/USD December 5 at 11:00 GMT

GBP/USD 1.5686 H: 1.5689 L: 1.5624

 

GBP/USD Technical

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

 

  • GBP/USD lost ground in Asian trade, testing support at 1.5624. The pair reversed directions late in the Asian session and has erased the earlier losses, as it continues to post gains in European trade.
  • 1.5717 is a weak resistance line. 1.5864 is stronger.
  • On the downside, 1.5644 is under strong pressure. 1.5505 is next.
  • 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 long positions on Friday, reversing the direction we saw a day earlier. This is 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

  • 9:30 British Consumer Inflation Expectations. Estimate 2.5%.
  • 13:30 US Nonfarm Employment Change. Estimate 231K.
  • 13:30 US Trade Balance. Estimate -41.3B.
  • 13:30 US Unemployment Rate. Estimate 5.8%.
  • 13:30 US Average Hourly Earnings. Estimate 0.2%.
  • 13:45 US FOMC Member Loretta Mester Speaks.
  • 15:00 US Factory Orders. Estimate 0.0%.
  • 19:45 US FOMC Member Stanley Fischer Speaks.
  • 20:00 US Consumer Credit. Estimate 16.5B.

*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.