GBP/USD - Steady As U.K. Manufacturing Data Improves

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 |  Includes: FXB, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

GBP/USD is steady in Thursday trading, as the pair trades in the mid-1.67 range in the North American session. In economic news, British CBI Industrial Order Expectations improved nicely in January. Over in the US, Unemployment Claims and Core CPI matched the forecast. The Philly Fed Manufacturing Index looked awful, posting its worst performance in a year.

British CBI Industrial Order Expectations showed strong improvement in January, rising to 3 points, compared to -2 points a month earlier. However, the markets had expected a stronger reading, with an estimate of 6 points. Earlier in the week, British Claimant Count Change improved in January, with a decline of -27.6 thousand, easily beating the estimate of -18.3 thousand. However, the unemployment rate edged higher, coming in at 7.2%. The estimate stood at 7.1%. The unexpected rise in unemployment marks the first time since March that the rate has surpassed the estimate. The Bank of England will face increased pressure to raise interest rates if unemployment drops below the 7.0% level, meaning that the unemployment rate will continue to be closely monitored by investors and analysts.

In the US, Unemployment Claims improved, dropping to 336 thousand. This was just shy of the estimate of 335 thousand. After some recent weak releases on the employment front, the markets will be pleased with this release. Meanwhile, inflation indicators continue to raise concerns, as Core CPI posted a paltry gain of 0.1% for the second straight month. Weak inflation levels are indicative of weak economic growth and could spell trouble for the US recovery. On the manufacturing front, the Philly Fed Manufacturing Index slumped badly, posting a decline of -6.3 points, compared to +9.4 points a month earlier. This marked the first reading below the zero level since January 2013.

According to the Federal Reserve minutes, which were released on Wednesday, we’re unlikely to see interest rates rise even if unemployment drops to 6.5%. Previously, the Fed had said they would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also indicated that the Fed will likely continue trimming QE, barring any downturns in the economy.

GBP/USD for Thursday, February 20, 2014

Forex Rate Graph 21/1/13

GBP/USD February 20 at 16:20 GMT

GBP/USD 1.6664 H: 1.6700 L: 1.6636

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6329 1.6416 1.6549 1.6705 1.6896 1.6964
Click to enlarge
  • GBP/USD is not showing much movement in Thursday trading. The pound touched a high of 1.67 in the European session but then retracted.
  • 1.6549 is providing strong support. This is followed by support at 1.6416.
  • 1.6705 has switched to a resistance line. Next, there is resistance at 1.6896, protecting the 1.69 line.
  • Current range: 1.6549 to 1.6705.

Further levels in both directions:

  • Below: 1.6549, 1.6416, 1.6329 and 1.6231
  • Above: 1.6705, 1.6896, 1.6964, 1.7087 and 1.7192

OANDA's Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions in Thursday trading, continuing the trend we've seen all week. This is not consistent with the pair's current movement, as the pound has posted slight losses. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar reversing course and moving to higher ground.

GBP/USD is steady in Thursday trading. In the North American session, the pound has registered modest losses.

GBP/USD Fundamentals

  • 10:34 British 10-year Bond Auction. Exp. 2.73%.
  • 11:00 British CBI Industrial Order Expectations. Estimate 6 points. Actual 3 points.
  • 13:30 US Core CPI. Estimate 0.1%. Actual 0.1%.
  • 13:30 US Unemployment Claims. Estimate 335K. Actual 336K.
  • 13:30 US CPI. Estimate 0.1%. Actual 0.1%.
  • 14:00 US Flash Manufacturing PMI. Estimate 53.6 points. Actual 56.7 points.
  • 15:00 Eurozone Consumer Confidence. Estimate -11 points.
  • 15:00 US Philly Fed Manufacturing Index. Estimate 9.2 points.
  • 15:00 US Mortgage Delinquencies. Actual 6.39%.
  • 15:00 US CB Leading Index. Estimate 0.5%. Actual 0.3%.
  • 15:30 US Natural Gas Storage. Estimate -255B. Actual -250B.
  • 16:00 US Crude Oil Inventories. Estimate 2.1M. Actual 1.0M.

*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.