By Kenny Fisher
The British pound has lost ground on Wednesday, wiping out the gains that the currency posted earlier in the week. Early in the North American session, the pair is trading in the low-1.67 range. In economic news, British Secondary Estimate posted a strong gain of 0.7%, while US New Home Sales surprised the markets with its best showing in seven months.
British releases looked solid on Wednesday. Second Estimate GDP posted a gain of 0.7%, matching the forecast, as British economic activity continues to head in the right direction. Preliminary Business Investment sparkled with a gain of 2.4%. This was a strong improvement from the 1.4% gain in the previous release. However, the indicator fell short of the estimate of 2.6%. Earlier in the week, CBI Realized Sales and BBA Mortgage Approvals looked strong, improving in January.
A nasty streak of weak US releases ended on Tuesday, as New Home Sales jumped by 468 thousand, crushing the estimate of 406 thousand. It was the key indicator's best showing since last June, and help allay concerns about the health of the housing sector, following weak housing numbers last week. The markets will be looking for more good news on Thursday, as the US releases Core Durable Goods Orders and the all-important Unemployment Claims.
The markets are keeping a close eye on the Federal Reserve, as Janet Yellen testifies before the Senate on Thursday. Last week's Fed minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it 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. Yellen is expected to reiterate that Fed will likely continue trimming QE, barring any downturns in the economy.
GBP/USD for Wednesday, February 26, 2014
GBP/USD February 26 at 16:35 GMT
GBP/USD 1.6632 H: 1.6701 L: 1.6622
- GBP/USD has posted modest losses on Wednesday. The pair pushed above the 1.67 line early in the European session but has since retracted.
- 1.6549 is providing strong support. This is followed by support at 1.6416.
- On the upside, 1.6705 held firm earlier in the day as the pair briefly pushed above the 1.67 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, continuing the trend we've seen all week. This is not consistent with the pair's current movement, as the pound has lost ground to the dollar. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar reversing directions and gaining ground against the pound.
GBP/USD has posted losses on Wednesday. The pound continues to lose ground in the North American session.
- 9:25 External BOE MPC Member Ben Broadbent Speaks.
- 9:30 British Second Estimate GDP. Estimate 0.7%. Actual 0.7%.
- 9:30 British Preliminary Business Investment. Estimate 2.6%. Actual 2.4%.
- 15:00 US New Home Sales. Exp. 406K.
- 15:30 US Crude Oil Inventories. Exp. 1.1M.
*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.