GBP/USD – Pound Pushes Above 1.67 Ahead of Key US Numbers

The British pound has posted slight gains on Friday. In the European session, the GBP/USD is trading in the low-1.67 range. Taking a look at economic news, British Nationwide HPI matched the forecast. In the US, it’s a busy day with three key events on the schedule – Preliminary GDP, Chicago PMI, and Pending Home Sales.

Federal Reserve Chair Janet Yellen testified on Thursday before a Senate committee. As expected, Yellen said that the Fed remains committed to tapering QE and would like to wind up the bond-buying scheme by the fall. At the same time, she acknowledged the string of weak US releases recently and said that the Fed would closely monitor to what extent the weak numbers are due to cold weather and what portion can be attributed to a “softer outlook”. The next Fed policy meeting takes place in mid-March and the markets will be looking for another $10 billion cut to QE.

Thursday was a mix for US key releases. Manufacturing data looked strong, as Core Durable Goods Orders jumped 1.1% in January. This surprised the markets, which had expected a decline of -0.1%. However, Unemployment Claims did not look as sharp, as the key indicator rose to 348 thousand, well above the estimate of 333 thousand. Meanwhile, a nasty streak of weak US releases ended on Wednesday as New Home Sales jumped by 468 thousand, crushing the estimate of 406 thousand. It was the housing indicator’s best showing since last June, and helped allay concerns about the health of the housing sector, following weak housing numbers last week. We’ll get another look at key housing data on Friday, with the release of  Pending Home Sales. The markets anticipate a strong gain after a miserable reading in December.

British releases have enjoyed a strong week. 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, with both improving in January.

GBP/USD for Friday, February 28, 2014

GBP/USD February 28 at 13:15 GMT

GBP/USD 1.6720 H: 1.6768 L: 1.6677

GBP/USD Technical

• GBP/USD has posted modest gains in Friday trade. The pair broke above resistance at 1.6705 in the European session.
• 1.6705 has switched to a support role after gains by the pound. This is followed by support at 1.6549.
• On the upside, 1.6896 is the next resistance line. Next, there is resistance at 1.6964, protecting the psychologically important 1.70 level.
• Current range: 1.6705 to 1.6896.

Further levels in both directions:

• Below: 1.6705, 1.6549, 1.6416, 1.6329 and 1.6231
• Above: 1.6896, 1.6964, 1.7087 and 1.7192

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Friday, continuing the direction we saw a day earlier. This is not consistent with the pair’s current move, as the pound has edged higher. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar gaining ground against the pound.

GBP/USD is showing some strong movement on Friday, but hasn’t been able to maintain any momentum. The volatility could continue in the North American session, as the US releases three major events later today.

GBP/USD Fundamentals

•  7:00 British Nationwide HPI. Estimate 0.6%. Actual 0.6%.
• 13:30 US Preliminary GDP. Exp. 2.6%.
• 13:30 US Preliminary GDP Price Index. Exp. 1.3%.
• 14:45 US Chicago PMI. Exp. 57.9 points.
• 14:55 US Revised UoM Consumer Sentiment. Exp. 81.4 points.
• 14:55 US Revised UoM Inflation Expectations.
• 15:00 US Pending Home Sales. Exp. 2.9%.
• 15:15 US FOMC Member Narayana Kocherlakota Speaks.
• 15:15 US FOMC Member Jeremy Stein Speaks.
• 15:30 Governor Mark Carney Speaks.

*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.