GBP/USD – Pound Pauses After Strong Gains

The pound is unchanged on Friday, following strong gains a day earlier. GBP/USD is trading just below the 1.54 line in the European session. On the release front, there are no major British releases. In the US, today’s highlight is Preliminary UoM Consumer Sentiment. The markets are expecting a strong reading, with an estimate of 98.2 points.

The pound jumped about 140 points on Thursday, taking advantage of a positive inflation report from the BOE. The Bank said it expects GDP to rise to 2.9% in 2015, up from 2.6% in 2014. Governor Mark Carney added that there is no concern of deflation and he expects inflation levels to rise. It wasn’t long ago that a rate hike by the BOE seemed imminent, but dropping inflation has reduced pressure for a rate hike, so it is possible that the BOE will not raise rates in 2015. This has led to a divergence in monetary stance with the US, as the Fed is expected to raise rates later in the year.

Earlier in the week, British Manufacturing Production, a key indicator, slipped to 0.1% in December, down from 0.1% a month earlier. The markets had expected a gain of 0.3%. There was no relief from British Industrial Production, which came in at -0.2%, marking a third straight decline. Meanwhile, the NIESR GDP Estimate, which helps track GDP on a monthly basis, posted a strong gain of 0.7% in the January report.

In the US, retail sales and jobless numbers were dismal on Thursday. Core Retail Sales declined by 0.9%, while Retail Sales dropped by 0.8%. Both were well off their estimates of -0.4%. There was no relief from unemployment claims, which jumped to 304 thousand, compared to 284 thousand in the previous reading. The markets had expected a stronger reading of 282 thousand.

GBP/USD for Friday, February 13, 2015

GBP/USD February 13 at 10:15 GMT

GBP/USD 1.5390 H: 1.5419 L: 1.5375

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5008 1.5165 1.5282 1.5392 1.5505 1.5642

 

  • GBP/USD has shown limited movement in the Asian and European sessions. The pair is putting strong pressure on resistance at 1.5392.
  • 1.5282 has strengthened in support following strong gains by the pound on Thursday.
  • On the upside, 1.5392 is fluid. Will the pair break past this line during the day? 1.5505 is stronger.
  • Current range: 1.5282 to 1.5392

Further levels in both directions:

  • Below: 1.5282, 1.5165, 1.5008, 1.4873 and 1.4781
  • Above: 1.5392, 1.5505, 1.5642 and 1.5786

 

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged on Friday. This is consistent with the lack of movement we’re currently seeing from the pair. The ratio has a majority of long positions, indicative of trader bias towards the pound moving higher.

GBP/USD Fundamentals

  • 9:30 British Construction Output. Estimate 2.6%. Actual 0.4%.
  • 13:30 US Import Prices. Estimate -3.1%.
  • 14:30 US CB Leading Index.
  • 15:00 US Preliminary UoM Consumer Sentiment. Estimate 98.2 points.
  • 15:00 US Preliminary UoM Consumer Inflation Expectations.

*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.