GBP/USD – Flat as Markets Eye Key US Numbers

The currency markets are enjoying a quiet day on Wednesday, and the GBP/USD is no exception, as the pair is showing very little activity. As we begin the North American session, GBP/USD is trading at the 1.64 line. On the release front, today’s highlight is US New Home Sales, with the markets expecting the indicator to post stronger numbers than in the previous release. We’ll get a look at US durables on Thursday. There are no British releases on Wednesday.

The pound has enjoyed a strong week, gaining over 100 points against the US dollar. The improving pound managed to shrug off some soft UK numbers on Tuesday. BBA Mortgage Approvals fell to 41.6 thousand, the indicator’s lowest level in a year. This was well short of the estimate of 42.9 thousand. Meanwhile, Public Sector Net Borrowing posted a deficit of GBP 10.9 billion. after recording a surplus a month earlier. This was higher than the estimate of GBP 10.3 billion.

US Existing Home Sales didn’t impress in August, slipping to 5.05 million, compared to 5.15 million in the previous release. This was way off the estimate of 5.21 million. The indicator had exceeded the estimate in the past three releases, so the weak numbers disappointed the markets. The markets are hoping for better news from New Home Sales, which will be released later on Wednesday. The indicator has been struggling lately, with the past two readings missing expectations. The markets are expecting a stronger reading for August, with an estimate of 432 thousand.

The US economy continues to grapple with weak inflation levels, as underscored by August releases. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first decline since October. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. Core PPI also softened in August. Low inflation levels could delay the Federal Reserve’s plan to raise interest rates, which is widely expected to take place in the first half of 2015.

GBP/USD for Wednesday, September 24, 2014

GBP/USD September 24 at 12:30 GMT

GBP/USD 1.6400 H: 1.6414 L: 1.6374

GBP/USD Technical

• The pound has had an uneventful day, trading close to the 1.64 line.
• 1.6382 has reverted to a support level and is a weak line. 1.6263 is stronger.
• 1.6484 is a strong resistance line.
• Current range: 1.6382 to 1.6484.

Further levels in both directions:

• Below: 1.6382, 1.6263, 1.6141, 1.6000 and 1.5864
• Above: 1.6484, 1.6605, 1.6755 and 1.6843

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Wednesday, continuing the direction seen a day earlier. This is not consistent with the lack of movement displayed by the pair movement. The ratio currently has a majority of long positions, indicative of trader bias towards the pound breaking out of range and moving to higher ground.

GBP/USD Fundamentals

• 14:00 US New Home Sales. Estimate 432K.
• 14:30 US Crude Oil Inventories. Estimate 0.7M.
• 16:05 US FOMC Member Loretta Mester 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.