Seeking Alpha
Currencies, macro, fixed income
Profile| Send Message|
( followers)  

By Kenny Fisher

GBP/USD has settled down on Thursday, after losing about 100 points a day earlier. On the release front, there was plenty of action in the US, as Unemployment Claims dropped sharply, while Preliminary GDP posted a rare decline. In the UK, the sole event is GfK Consumer Confidence. The markets are expecting another weak reading in April.

US numbers were mostly a disappointment on Thursday. Preliminary GDP, the primary gauge of economic activity, posted its first decline since Q2 of 2009. The indicator came in at -1.0% for Q1, worse than the estimate of -0.6%. Harsh winter conditions took their toll on the economy in Q1, and analysts expect a rebound in Q2. After a strong gain in March, Pending Home Sales softened, coming in at 0.4%. This was nowhere near the gain of 1.1%. On a brighter note, Employment Claims dropped to 300 thousand, easily beating the estimate of 321 thousand.

The US consumer continues to be optimistic, which is critical for the US recovery. On Tuesday, CB Consumer Confidence continued to look strong as the key indicator improved to 83.0 points in April, which was within expectations. This was the third straight reading above the 80-point level. Meanwhile, the Standard & Poor’s/Case-Shiller house price index posted a strong gain of 12.4%, surpassing the estimate of 11.9%.

UK releases have not had a good week. CBI Realized Sales plunged to 16 points in April, down sharply from 30 points a month earlier. This drop surprised the markets, which had expected a strong reading of 36 points. Early in the week, BBA Mortgage Approvals softened for the third consecutive month. The indicator dropped to 42.2 thousand, well off the estimate of 45.2 thousand. This was the lowest level we’ve since last September, and could point to trouble in the UK housing sector. Is the British economy running out of steam? If so, a slowdown could push off any rate increases by the Bank of England. As BOE Governor Mark Carney has told anyone who is interested in listening, the central bank is no hurry to raise rates until the economy shows signs of stronger growth and less slack.

GBP/USD for Thursday, May 29, 2014

GBP/USD May 29 at 16:53 GMT

GBP/USD 1.6718 H: 1.6740 L: 1.6693

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6436 1.6549 1.6705 1.6765 1.6896 1.700

  • GBP/USD is stable on Thursday. The pair touched a high of 1.6740 early in the European session but was unable to consolidate.
  • On the upside, 1.6765 has reverted to a resistance role. 1.6896 is stronger.
  • 1.6705 is a weak support line and was breached earlier in the day. 1.6549 is stronger.

Further levels in both directions:

  • Below: 1.6705, 1.6549, 1.6436 and 1.6346
  • Above: 1.6765, 1.6896, 1.70, 1.7210, 1.7374 and 1.7538

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in Thursday trade. This is consistent with what we are seeing from the pair, as the pair is not showing much movement. A majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar posting gains against the pound.

GBP/USD is steady on Thursday. In the North American session, the pair is unchanged.

GBP/USD Fundamentals

  • 12:30 US Preliminary GDP. Estimate -0.6%. Actual -1.0%.
  • 12:30 US Unemployment Claims. Estimate 321K. Actual 300K.
  • 12:30 US Preliminary GDP Price Index. Estimate 1.3%. Actual 1.3%.
  • 14:00 US Pending Home Sales. Estimate 1.1%. Actual 0.4%.
  • 14:30 US Natural Gas Storage. Estimate 110B. Actual 114B.
  • 15:00 US Crude Oil Inventories. Estimate -0.1M. Actual 1.7M.
  • 23:05 British GfK Consumer Confidence. Estimate -2 points.

*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.

Source: GBP/USD - Little Movement As U.S. Posts Mixed Numbers