GBP/USD – Pound Slides on Excellent US Jobless Claims

The pound has taken a tumble on Thursday, losing about 100 points to the US dollar. In the North American session, GBP/USD is trading in the mid-1.50 range. In the UK, Nationwide HPI posted a gain of 0.3%, close to the estimate. CBI Realized Sales fell sharply to 39 points. US numbers were mixed, as Unemployment Claims sparkled, dropping to 265 thousand. However, Pending Home Sales declined 3.7%.

US employment numbers have improved as the economy chugs along. This was underscored by Unemployment Claims, which plunged to 265 thousand, down from 307 thousand a week earlier. This marked the indicator’s lowest level since April 2000. The news was not as positive from Pending Home Sales, which declined 3.7%, its worst reading in a year.

On Wednesday, the Federal Reserve reiterated that it would be “patient” regarding the timeline for a raise in interest rates, which have been close to zero since 2008. However, the Fed gave a vote of confidence to the US economy, noting that the economy was expanding at a “solid pace”. The markets expect the Fed to raise rates sometime during the year, so the “Fed rate watch” is sure to continue, as the markets look for clues as to when the Fed will make a move.

On Tuesday, Preliminary British GDP for Q4 posted a gain of 0.5% in Q4. This was lower than the gain of 0.7% for Final GDP for Q3, as economic growth has slowed down. With British growth and inflation levels easing, there is less pressure on BOE Governor Carney to raise interest rates, and this divergence with the Federal Reserve could boost the dollar at the expense of the pound.

GBP/USD for Thursday, January 29, 2015

GBP/USD January 29 at 16:35 GMT

GBP/USD 1.5045 H: 1.5162 L: 1.5025

GBP/USD Technical

• GBP/USD showed little movement in the Asian and European sessions. The pair has posted sharp losses in North American trade.
•  1.5008 has weakened in support as the pair trades at lower levels. 1.4873 is stronger.
• 1.5165 is a strong resistance line.
• Current range: 1.5008 to 1.5165

Further levels in both directions:

• Below: 1.5008, 1.4873, 1.4781 and 1.4670
• Above: 1.5165, 1.5282, 1.5392, 1.5505 and 1.5642

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Thursday. This is consistent with the pair’s movement, as GBP/USD has recorded sharp losses. The ratio is close to a split between long and short open positions, indicative of a lack of trader bias as to what direction the pound will take.

GBP/USD Fundamentals

• 7:00 British Nationwide HPI. Estimate 0.4%. Actual 0.3%
• 11:00 British CBI Realized Sales. Estimate 31 points. Actual 39 points
• 13:30 US Unemployment Claims. Estimate 301K. Actual 265K
• 15:00 US Pending Home Sales. Estimate +0.6%. Actual -3.7%
• 15:30 US Natural Gas Storage. Estimate -113B. Actual -94B

*Key releases are highlighted in bold

*All release times are GMT

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