GBP/USD – Slight Gains As British CPI Matches Expectations

The pound has edged higher in Tuesday trade, as GBP/USD is trading in the high-1.65 range in the North American session. On the release front, British CPI continues to lose ground, dropping to a four-year low. CBI Realized Sales took a tumble in February. In the US, the numbers pointed in both directions on Tuesday. Consumer Confidence sparkled, hitting a six-year high, but New Home Sales weakened in February and fell short of the estimate.

US data was a mix on Tuesday. CB Consumer Confidence jumped to 82.3 points, easily surpassing the estimate of 78.7 points. This was the key indicator’s best showing since December 2007. An increase in consumer sentiment usually translates into consumer spending, which is a critical component of economic growth. The news wasn’t as good from the housing sector, as New Home Sales fell to 440 thousand, down sharply from the January release of 468 thousand. The reading was short of the estimate of 447 thousand. We’ll get a look at Pending Home Sales later in the week.

In the UK, CPI continues to lose ground, as CPI dropped to 1.7%, matching the forecast. The key index has steadily dropped since mid-2013, when CPI was close to 3%. BBA Mortgage Approvals dropped to 47.6 thousand, short of the estimate of 50.0 thousand. CBI Realized Sales, an important gauge of consumer spending, continues to fluctuate, leading to estimate that are well off the mark. The indicator slipped to 13 points, down from 37 points a month earlier. This was nowhere near the estimate of 30 points.

World markets have until now managed to avoid much fallout from the Ukrainian crisis, although the situation remains very tense. Western countries are scrambling to respond to Russia’s lightning takeover of the Ukrainian region. The G-7 is holding an emergency meeting in the Hague, and it seems likely that more sanctions will be leveled against Russia. Meanwhile, Ukraine says it has ordered its troops in Crimea to withdraw to the mainland, which marks a tacit recognition of the Russian annexation of Crimea. The situation in Ukraine is the most severe crisis in East-West relations since the Cold War ended, and we’re likely to see further developments which could affect the markets.

GBP/USD for Tuesday, March 25, 2014

GBP/USD March 25 at 16:25 GMT

GBP/USD 1.6508 H: 1.6536 L: 1.6482

GBP/USD Technical

• GBP/USD continues to have a quiet week. The pair is trading close to the 1.65 line.
• On the downside, 1.6416 is providing support. This is followed by support at 1.6329.
• 1.6549 continues to provide resistance, but is not a strong line. There is stronger resistance at 1.6705.
• Current range: 1.6416 to 1.6549.

Further levels in both directions:

• Below: 1.6416, 1.6329, 1.6236 and 1.6146
• Above: 1.6549, 1.6705, 1.6765, 1.6896 and 1.6964

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Tuesday, continuing the trend which began last week. This is consistent with what we are seeing from the pair, 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 improving against the pound.

The pair is trading near the 1.65 line on Tuesday. The pair is steady in the North American session.

GBP/USD Fundamentals

• 9:30 British CPI. Estimate 1.7%. Actual 1.7%.
• 9:30 British PPI Input. Estimate 0.4%. Actual -0.4%.
• 9:30 British RPI. Estimate 2.7%. Actual 2.6%.
• 9:30 British Core CPI. Estimate 1.6%. Actual 1.7%.
• 9:30 British HPI. Estimate 5.7%. Actual 6.8%.
• 9:30 British PPI Output. Estimate 0.2%. Actual 0.0%.
• 9:30 British BBA Mortgage Approvals. Estimate 50.0K. Actual 47.6K.
• 11:00 British CBI Realized Sales. Estimate 30 points. Actual 13 points.
• 13:00 US S&P/CS Composite-20 HPI. Estimate 13.3%. Actual 13.2%.
• 13:00 US HPI. Estimate 0.7%. Actual 0.5%.
• 13:59 US Richmond Manufacturing Index. Estimate -1 point. Actual -7 points.
• 14:00 US CB Consumer Confidence. Estimate 78.7 points. Actual 82.3 points.
• 14:00 US New Home Sales. Estimate 447K. Actual 440K.
• 23:00 US FOMC Member Charles Plosser 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.