GBP/USD – Pound Slides Ahead of Carney Remarks

GBP/USD has posted strong losses on Monday, as the pair trades in the low-1.56 range in the North American session. On the release front, CBI Industrial Order Expectations improved to 5 points. In the US, manufacturing data was mixed, as the Empire State Manufacturing Index tumbled to -3.6 points, while Industrial Production posted a strong gain of 1.3%. On Tuesday, we’ll hear from BOE Governor Mark Carney, who will speak after the BOE releases its Financial Stability Report. There is concern in the markets that Carney may delay an interest rate hike, which would boost the pound, as inflation is below target and the economy has slowed down somewhat.

The US ended the week with mixed news, as inflation dipped while consumer confidence jumped. The Producer Price Index, the primary gauge of manufacturing inflation, dropped by 0.2%, its worst showing in six months. The estimate stood at -0.1%.  Meanwhile, UoM Consumer Sentiment moved higher for a fourth straight month, pointing to increased optimism among US consumers. The key indicator soared to 93.8 points, its highest level since January 2007 and well above the forecast of 89.6 points. On Friday, there was good news from retail sales and jobless claims. Core Retail Sales came in at 0.5%, ahead of the estimate of 0.1%. Not to be undone, Retail Sales posted a gain of 0.7%, beating the estimate of 0.4%. This was the indicator’s strongest showing in 12 months. There was more good news on the job front, as Unemployment Claims dipped to 294 thousand, below the forecast of 299 thousand.

The UK continues to post trade deficits, but the October reading improved slightly, with the deficit narrowing to GBP 9.6 billion, just above the estimate of GBP 9.5 billion. Last week, Manufacturing Production surprised with a decline of 0.7% in October, well short of the forecast of 0.2%. This was the key indicator’s worst showing since May. The manufacturing sector continues to point downwards, hampered by weak demand from a depressed Eurozone economy. Meanwhile, NIESR GDP Estimate, which helps track GDP, remained steady at 0.7% for a third straight month.

GBP/USD for Monday, December 15, 2014

GBP/USD December 15 at 16:15 GMT

GBP/USD 1.5618 H: 1.5747 L: 1.5601

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5282 1.5392 1.5505 1.5644 1.5717 1.5864

 

  • GBP/USD was uneventful in the Asian session. The pair posted sharp losses in the European session, breaking below support at 1.5717. The pair continues to weaken in North American trade and has pushed below support at 1.5644.
  • 1.5644 has switched to a resistance role as the pound has dropped sharply. 1.5717 is stronger.
  • 1.5505 is a strong support level.
  • Current range: 1.5505 to 1.5644

Further levels in both directions:

  • Below: 1.5505, 1.5392, 1.5282 and 1.5165
  • Above: 1.5644, 1.5717, 1.5864, 1.6000 and 1.6141

 

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Monday. This is not consistent with the movement of the pair, as the pound has posted sharp losses. The ratio remains close to a split between long and short positions, indicative of a lack of trader bias as to what direction the pound will take next.

GBP/USD Fundamentals

  • 11:00 British CBI Industrial Order Expectations. Estimate 3 points. Actual 5 points.
  • 13:30 US Empire State Manufacturing Index. Estimate 12.1 points. Actual -3.6 points.
  • 14:15 US Capacity Utilization Rate. Estimate 79.4%. Actual 80.1%.
  • 14:15 US Industrial Production. Estimate 0.8%. Actual 1.3%.
  • 15:00 US NAHB Housing Market Index. Estimate 59 points. Actual 57 points.
  • 21:00 US TIC Long-Term Purchases. Estimate 72.8B.

*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.