The British pound was almost unchanged on Wednesday, as GBP/USD closed the day at 1.5550. Canadian and US markets are closed on Thursday for the New Year’s holiday. Both markets will resume action on Friday, highlighted by the release of British and US Manufacturing PMIs.
US releases wrapped up 2014 with mixed results. Unemployment Claims surprised with a sharp rise, coming in at 298 thousand, compared with 280 thousand in the previous reading. The estimate stood at 287 thousand. On the housing front, Pending Home Sales bounced back from a decline in the previous reading, posting a gain of 0.8% in December. This beat the forecast of 0.6%. The news was not as good from Chicago PMI, which dropped to 58.3 points, its worst showing since June. The reading fell short of the estimate of 60.2 points.
With the US economy showing better numbers as we head into 2015, the US consumer is showing more optimism about the economy. On Tuesday, CB Consumer Confidence rose to 92.6 points, up from 88.8 points a month earlier. Although this missed the estimate of 94.6, this was a solid reading which follows last week’s UoM Consumer Sentiment report. That indicator has been on an upward swing and hit 93.6 points in December, its highest level since February 2007. Consumer confidence numbers are closely watched by analysts, as increased confidence should translate into more spending by consumers, creating more jobs and strengthening economic activity.
The US dollar had its way with its rivals in 2014, and the British pound was no exception. The British currency started the year in excellent shape, trading at 1.64. However, the pound slipped badly in 2014, dropping to 1.5550 by the end of the year. The US economy continues to outperform that of the UK, and monetary divergence could play a major role in the fortunes of the pound. The Federal Reserve is expected to raise interest rates in 2015, and if the BOE does not follow suit, the pound is likely to lose ground versus the dollar.
GBP/USD for Thursday, January 1, 2015
- GBP/USD was almost unchanged on Wednesday. The pair touched a high of 1.5621 in the European session, putting pressure on resistance at 1.5644.
- 1.5644 is the next resistance line.
- 1.5505 is an immediate support line.
- 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 has a majority of long positions, indicative of trader bias towards the pound continuing to move to higher ground.
- There are no UK or US releases on Thursday.
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.