GBP/USD – Pound Soars Despite Soft British Jobless Data

The British pound has posted strong gains in the Wednesday session. In North American trade, GBP/USD is trading at 1.4207, up 1.48% on the day. In economic news, the UK released key employment numbers. Wage growth remained unchanged at 2.5%, matching the forecast. Jobless claims climbed to 8.6 thousand, well above 2.3 thousand. There was no change to the unemployment rate, which held at 4.3%. This matched the estimate. In the US, Existing Home Sales disappointed, slowing to 5.57 million. This missed the forecast of 5.72 million. On Thursday, the US releases unemployment claims and New Home Sales.

The pound continues to impress, and is currently at its highest level since June 2016. GBP/USD has climbed 5.3% in January, as the US dollar has been battered by its major rivals. On Tuesday, the pair pushed above the symbolic 1.40 level, and with sentiment waning over the dollar, the pound rally could continue this week. The markets are keeping a close eye on Preliminary GDP for Q4, which will be released on Friday.

The US government shutdown turned out to be little more than a nuisance, with only one working day lost. On Monday, the Senate voted 266-150 to extend government funding until February 8. This stopgap measure will enable the government to provide services during that time, but the lawmakers will need to hammer out a longer-term agreement, as these short extensions are just band aid solutions. The Democrats held up a funding bill last week, in order to force the Republicans to the table over illegal immigration. The Republicans have promised to hold a vote on this issue, but many Democratic lawmakers remain skeptical that President Trump and the Republicans will deal in good faith over immigration.

 

GBP/USD Fundamentals

Wednesday (January 24)

  • 4:30 British Average Earnings Index. Estimate 2.5%. Actual 2.5%
  • 4:30 British Claimant Count Change. Estimate 2.3K. Actual 8.6K
  • 4:30 British Unemployment Rate. Estimate 4.3%. Actual 4.3%
  • 9:00 US HPI. Estimate 0.4%. Actual 0.4%
  • 9:45 US Flash Manufacturing PMI. Estimate 55.2. Actual 55.3
  • 9:45 US Flash Services PMI. Estimate 54.5. Actual 53.3
  • 10:00 US Existing Home Sales. Estimate 5.72M. Actual 5.57M
  • 10:30 US Crude Oil Inventories. Estimate -1.0M. Actual -1.1M

*All release times are GMT

*Key events are in bold

 

GBP/USD for Wednesday, January 24, 2018

GBP/USD January 24 at 11:45 EDT

Open: 1.4002 High: 1.4242 Low: 1.3997 Close: 1.4210

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3901 1.4010 1.4128 1.4271 1.4346 1.4439

GBP/USD has broken through two resistance lines on Wednesday. The pair posted slight gains in the Asian session and continued with sharp gains in European trade. GBP/USD continues to move higher in North American trade

  • 1.4128 is providing support
  • 1.4271 is the next line of resistance

Current range: 1.4128 to 1.4271

Further levels in both directions:

  • Below: 1.4128, 1.4010, 1.3901 and 1.3809
  • Above: 1.4271, 1.4346 and 1.4439

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged this week. Currently, short positions have a majority (60%), indicative of trader bias towards GBP/USD reversing directions and heading to lower ground.

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.