GBP/USD – Limited Movement As US Home Sales Dives

GBP/USD is calm on Monday as the pair is trading in the low-1.56 range. The pound had a rough week, losing about 100 points to the strong US dollar. On the release front, it’s a very quiet start to the week. US Existing Home Sales was unexpectedly weak, sliding to 4.93 million in November. In the UK, the BOE released the minutes of last week’s Financial Policy Committee.

It was a disappointing start to the week for US releases, as Existing Home Sales fell to 4.93 million in November, its lowest level in six months. The markets had expected a reading of 5.21 million. The weak reading followed the October release of 5.26 million, which was its best showing in over a year. GBP/USD has shown little movement to start off the week, but this could well change on Tuesday, as the US releases GDP and Core Durable Goods Orders.

There were some strong British releases late last week. CBI Realized Sales, which surveys retailers and wholesalers, jumped spectacularly to 61 points, its strongest showing since 1988. As well, Retail Sales, the primary gauge of consumer spending, jumped 1.6%. This crushed the estimate of 0.3% and marked its best showing since February. On Wednesday, British employment data was mixed, as Claimant Count Change dropped by 26.9 thousand, easily beating the estimate of -19.8 thousand. However, the unemployment rate moved unexpectedly higher, edging up to 6.0%.

Like many of the dollar’s major rivals, the pound plunged on Wednesday after the Federal Reserve policy statement. Previous Fed policy statements have usually stated that the Fed would maintain low rates for a “considerable time”, but the December statement changed terminology, saying the Fed would be “patient” before raising rates. In a follow-press conference, Federal Reserve chair Janet Yellen was less ambiguous, saying that the Fed was unlikely to raise rates for the “next couple of meetings”. The markets took this to mean that a rate hike is in the works, but not before April. The pound was down sharply on the news, as GBP/USD dropped about 200 points on Wednesday.

GBP/USD for Monday, December 22, 2014

GBP/USD December 22 at 15:45 GMT

GBP/USD 1.5627 H: 1.5666 L: 1.5599

 

GBP/USD Technical

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

 

  • GBP/USD edged higher in the Asian session, testing resistance at 1.5644. The pair gave up these gains in European trade and is stable in the North American session.
  • On the upside, 1.5644 remains under pressure and could face further action during the day. 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 is showing very little movement. The ratio is pointing to a majority of long positions, indicative of trader bias towards the pound moving higher.

GBP/USD Fundamentals

  • 9:30 British FPC Meeting Minutes.
  • 15:00 US Existing Home Sales. 5.21M. Actual 4.93M.

*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.