GBP/USD – Slow Start to Week for Pound

GBP/USD is showing little movement on Monday, as the pair trades at 1.5460 in the European session. In the UK, Rightmove HPI slipped to 0.6%, down from 0.9% a month earlier. In the US, we’ll hear from two Fed FOMC members. The sole economic report is the NAHB Housing Market Index, which is expected to remain steady at 62 points. There are two events on Tuesday that should be treated as market-movers. In the UK, BOE Governor Mark Carney will testify before the Treasury Select Committee. Also, the US will release Building Permits, with little change expected in the September report.

US key releases on Friday were a mixed bag. UoM Consumer Sentiment, the primary gauge of consumer confidence, jumped to 92.1 points in October, up from 85.7 points. This easily beat the estimate of 88.8 points. At the same time, JOLTS Job Openings slipped to 5.37 million, way off the estimate of 5.77 million. The JOLTS release is especially important as it is watched closely by the Fed and is a factor in its decision-making process regarding monetary policy.

Meanwhile, US manufacturing numbers in October were dismal. The Empire State Manufacturing Index posted its third straight decline, coming in at -11.4 points, missing the forecast of -7.3 points. The Philly Fed Manufacturing Index, a key release, came in at -4.5 points, shy of the estimate of -1.8 points. These figures point to contraction in the US manufacturing sector, which continues to suffer from weak global demand.

US Federal Reserve policymakers seem divided on the question of a rate hike in 2015. This was underscored last week by FOMC member Lael Brainard, who stated that the Fed should not raise rates before global economic conditions improve. Brainard noted that the Chinese slowdown has caused economic turmoil worldwide, and the US economy could lose steam due to weaker exports and weak global economic conditions. On the other end of the spectrum, another member of the FOMC, Dennis Lockhart, sounded more optimistic about a rate hike before the end of 2015. Lockhart did not rule out a rate hike in October, and added that the Fed would have more data to evaluate before its December policy meeting. With FOMC members sending out such conflicting messages, exasperated markets have been unable to get a handle on the timing of a rate hike, and this failure of the Fed to communicate a clear message continues to lead to uncertainty in the markets.

GBP/USD Fundamentals

Monday (Oct. 19)

• 14:00 Fed FOMC Member Lael Brainard Speaks.
• 14:00 NAHB Housing Market Index. Estimate 62 points.
• 4:00 Fed FOMC Member Jeffrey Lacker Speaks.

Upcoming Releases

Tuesday (Oct. 20)

• 10:00 BOE Governor Mark Carney Speaks.
• 12:30 US Building Permits. Estimate 1.16M

*Key releases are highlighted in bold

*All release times are GMT

GBP/USD for Monday, October 19, 2015

GBP/USD October 19 at 10:15 GMT

GBP/USD 1.5460 H: 1.5481 L: 1.5426

GBP/USD Technical

• GBP/USD has showed very little movement during the day, continuing the trend we saw late last week.
• 1.5485 is a weak resistance line and could see further action during the day.
• 1.5341 is a strong support level.
• Current range: 1.5341 to 1.5485

Further levels in both directions:

• Below: 1.5341, 1.5269, 1.5163 and 1.5026
• Above: 1.5485, 1.5590 and 1.5660

OANDA’s Open Positions Ratio

GBP/USD ratio is close to evenly split on Tuesday, pointing to a lack of trader bias as to what direction GBP/USD will take next.

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.