GBP/USD – Pound Settles Down After Recent Gains

GBP/USD has edged lower in Monday trading, as the pair trades just below the 1.64 line in the North American session. On Friday, US Non-Farm Payrolls was a major disappointment and the pound took full advantage, gaining close to one cent on the day. It’s a quiet start to the week, with no releases out of the UK or the US on Monday.

On Friday, the markets were treated to another disappointing Nonfarm Payrolls release. The key employment indicator improved to 113 thousand, but this was well of the estimate of 185 thousand. There was some good news as well on the employment front, as the Unemployment Rate dipped to 6.6%, its lowest level in over five years.

There were no surprises from the BOE last week, as the central bank kept its asset purchase facility and interest rate levels unchanged. QE remains pegged at 375 billion pounds, while the benchmark interest rate stays at 0.50%. With the British economy showing marked improvement, there is pressure on the BOE to raise interest rates, but Governor Mark Carney has balked until now. We’ll get a look at the BOE Inflation Report later this week and if there are indications that inflation is on the rise, speculation will increase about a rate hike.

British Manufacturing numbers disappointed on Friday, as Manufacturing Production posted a 0.3% gain in January. This was up from 0.0% a month ago, but fell short of the estimate of 0.6%. Industrial Production followed suit, posting a gain of 0.4% but missing the forecast of 0.7%. With Manufacturing PMI weakening in January, there is trouble afoot in the UK manufacturing sector.

GBP/USD for Monday, February 10, 2014

GBP/USD February 10 at 15:25 GMT

GBP/USD 1.6390 H: 1.6427 L: 1.6383

GBP/USD Technical

• GBP/USD has edged lower in Monday trade. The pair touched a high of 1.6427 late in the Asian session but has retracted back below the 1.64 line.
• On the downside, 1.6329 is providing support. This is followed by support at 1.6244.
• 1.6416 is the next resistance line. This is a weak line which could face pressure during the day. There is stronger resistance at 1.6549.
• Current range: 1.6329 to 1.6416

Further levels in both directions:

• Below: 1.6329, 1.6231, 1.6125, 1.6050 and 1.60
• Above: 1.6416, 1.6549, 1.6705 and 1.6964

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Monday, continuing the trend we saw on Friday. This is consistent with the pair’s 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 continuing to move upwards.

The pound has reversed directions after strong gains on Friday. Early in the North American session, GBP/USD has dipped below the 1.64 line.

GBP/USD Fundamentals

* There are no US or British releases on Monday.

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.