GBP/USD – Pound Choppy At Start of Week

GBP/USD has shown some movement in both directions on Monday, but has been unable to sustain any momentum. In the North American session, the pair is trading in the mid-1.66 range. On Friday, US Existing Home Sales looked weak, as the key indicator slumped to its lowest level since July 2012. There is little activity on Monday, as the sole US release, Flash Services PMI, slipped badly. There are no British releases on the schedule.

US numbers continue to raise concerns. After weak releases from Building Permits and the Philly Manufacturing Index, Existing Home Sales sagged on Friday, dropping to 4.62 million in January, compared to 4.87 million a month earlier. This was well short of the estimate of 4.73 million, and the lowest reading from the key indicator since July 2012.  The markets will be hoping for better news from New Home Sales on Wednesday.

Looking at last week’s key UK releases, Retail Sales had a dismal January, with a reading of -1.5%, well below the estimate of -0.9%. This indicator is the primary gauge of consumer spending, and is another indication that the British economy may be slowing down. 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 the unemployment rate 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.

Last week’s  Federal Reserve 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. The minutes also indicated that the Fed will likely continue trimming QE, barring any downturns in the economy.

GBP/USD for Monday, February 24, 2014

GBP/USD February 24 at 16:30 GMT

GBP/USD 1.6646 H: 1.6679 L: 1.6584

GBP/USD Technical

• GBP/USD is showing movement in both directions on Monday, as the pair tries to find its footing.
• 1.6549 is providing support. This is followed by support at 1.6416.
• 1.6705 is the next resistance line. It could face pressure during the North American session. 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 Monday trading. This is consistent with the pair’s current movement, as the pound has edged higher against the dollar. A large 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 choppy as we start the week. The pair is moving upwards in the North American session.

GBP/USD Fundamentals

• 14:00 US Flash Services PMI. Estimate 56.9 points. Actual 52.7 points.

*Key releases are highlighted in bold

*All release times are GMT

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