GBP/USD - High-Flying Pound Flirts With 1.70 Line

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

By Kenny Fisher

GBP/USD is flirting with the key 1.70 line on Monday, as the pair pushed above this level for the first time since August 2009. On the release front, Rightmove HPI kicked off the week, with a paltry gain of 0.1.%, its worst showing in 2014. There are no British releases on Monday. On Tuesday, we'll get a look at a host of British inflation indicators, highlighted by CPI. In the US, the week started on a positive note as Empire State Manufacturing Index posted another strong reading. Capacity Utilization Rate and Industrial Production met expectations.

The US ended a rough week on a sour note, as inflation and consumer confidence numbers missed their estimates. PPI, a key gauge of inflation in the manufacturing sector, came in at -0.2%, its worst reading since October. The estimate stood at 0.1%. Preliminary UoM Consumer Sentiment also lost ground, falling to 81.3 points, short of estimate of 83.3. However, with only one reading this year below the 80-point level, US consumer confidence remains at high levels.

Thursday's key US events were a major disappointment, as retail sales and employment numbers were weak. Retail Sales came in at 0.3%, short of the estimate of 0.5%. Core Retail Sales could only muster a gain of 0.1%, shy of the forecast of 0.4%. Unemployment Claims, one of the most important economic indicators, rose to 317 thousand, missing market expectations of 306 thousand.

British employment numbers looked sharp on Wednesday. Claimant Count Change improved to -27.4 thousand, beating the estimate of -25.0 thousand. As well, the Unemployment Rate dropped to 6.6%, edging below the estimate of 6.7%. This marked the lowest rate since January 2009, further proof that the recovery is gaining speed. Earlier in the week, Manufacturing Production, a key release, posted a strong gain of 0.4%, matching the forecast. The NIESR GDP estimate, which helps analysts track GDP on a monthly basis, posted another strong gain, coming in at 0.9%. The BOE continues to insist that a rate hike is not in the cards before 2015, but Governor Carney will face growing pressure to make a move if growth improves and unemployment continues to decline.

GBP/USD for Monday, June 16, 2014

GBP/USD June 16 at 15:40 GMT

GBP/USD 1.6984 H: 1.7011 L: 1.6960

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6700 1.6825 1.6920 1.7000 1.7000 1.7183
Click to enlarge
  • GBP/USD has posted gains on Thursday. The pair pushed above the 1.68 line late in the Asian session.
  • 1.6825 is the next resistance line.
  • The round number of 1.6700 is providing support. Next, there is support at 1.6605, protecting the 1.65 level.
  • Current range: 1.6700 to 1.6825.

Further levels in both directions:

  • Below: 1.6920, 1.6825, 1.6700 and 16605
  • Above: 1.70, 1.7183 and 1.7228 and 1.7383

OANDA's Open Positions Ratio

GBP/USD continues to show gains in short positions on Monday. This is consistent with the movement of the pair, as the pound has posted slight gains against the dollar to start the week. A significant majority of open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar changing directions and moving higher.

GBP/USD has posted small gains on Monday. The pair has edged lower in the North American session.

GBP/USD Fundamentals

  • 13:00 US TIC Long-Term Purchases. Estimate 41.3 B. Actual -24.2B.
  • 13:15 US Capacity Utilization Rate. Estimate 78.9%. Actual 79.1%.
  • 13:15 US Industrial Production. Estimate 0.6%. Actual 0.6%.
  • 14:00 US NAHB Housing Market Index. Estimate 47 points. Actual 49 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.