- MarketPulse - https://www.marketpulse.com -

GBP/USD – Pound Jumps on Weak US Durable Reports

The pound has posted strong gains on Tuesday. In the North American session, GBP/USD is trading just shy of the 1.52 line. It was a busy day on the releaser front. British GDP posted a gain of 0.5%. In the US, the news was mixed. Durable Goods Orders posted a sharp decline of 3.4%. Elsewhere, New Home Sales rose to 481 thousand, and CB Consumer Confidence jumped to 102.9 points.

Preliminary British GDP for Q4 posted a gain of 0.5% in Q4. This was lower than the gain of 0.7% for Final GDP for Q3, as economic growth has slowed down. Still, the battered pound managed to shrug off this reading, as GBP/USD has posted sharp gains on Tuesday. With British growth and inflation levels easing, there is less pressure on BOE Governor Carney to raise interest rates, and this divergence with the Federal Reserve could boost the dollar at the expense of the pound.

It was a busy day for US releases. Durable Good reports disappointed, as Durable Goods Orders plunged 3.4%, marking a 4-month low. There was no relief from Core Durable Goods Orders, which declined by 0.8%, its fifth drop in six readings. The markets had expected gains from both indicators. There was much better news later in the day, as CB Consumer Confidence jumped to 102.9 points, crushing the estimate of 95.3 points. New Home Sales followed suit, rising to 481 thousand, well above the forecast of 452 thousand.

Greeks went to the polls on Sunday, and the far-left Syriza party emerged victorious. Syriza ran on a platform of ending the crushing austerity scheme which Greeks have endured as part of the €240 billion bailout negotiated between and the EU, ECB and IMF. Predictably, the euro fell after the election results but has since stabilized, gaining over 100 points on Monday. Syriza’s win certainly throws a monkey wrench into the Greek bailout program, but the new Greek government is likely to negotiate a deal with Greece’s creditors. A Greek exit from the Eurozone may make for interesting headlines, but such a scenario is considered unlikely. Indeed, Greek Prime Minister-elect Alexis Tsipras has promised to keep Greece in the Eurozone. Still, there remains plenty of uncertainty as to what will happen with the bailout plan, so traders can expect events in Athens to have a strong impact on the currency markets.

GBP/USD for Tuesday, January 27, 2015

GBP/USD January 27 at 16:25 GMT

GBP/USD 1.5193 H: 1.5223 L: 1.5060

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.4873 1.5008 1.5165 1.5282 1.5392 1.5505

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Tuesday. This is consistent with the pound’s sharp gains, as many long positions have been covered, resulting in a larger percentage of open short positions. The ratio currently has a majority of short positions, indicative of trader bias towards the pound reversing direction and moving lower.

GBP/USD Fundamentals

*Key releases are highlighted in bold

*All release times are GMT

 

OANDA MarketPulse Nominated for FXstreet’s 2015 Forex Best Awards

We are pleased to share the news that FXstreet – Europe’s oldest forex trading portal, published online in more than 50 countries – has nominated your MarketPulse team for the “Best Sell-Side Analysis Team” award again this year (the winners in 2014!), as well as in the category of “Best Analysis”.

The annual Forex Best Awards highlight the best analysis, educational content, and contributors on its website from the preceding year. It is a tremendous honour to be considered for this industry accolade out of the thousands of top tier banks and financial blogs online.

However, in order to win these important awards, we need your help – we need you to vote for us [1].

[1]

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 [5]

Currency Analyst at Market Pulse [6]
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.