GBP/USD – Limited Gains For Pound To Kick Off Week

The British pound has edged higher in Monday trading, as GBP/USD trades in the low-1.68 range. On Friday, there was mixed news out of the US, as Building Permits shot higher while UoM Consumer Sentiment weakened in April. On the Monday release front, there are no UK or US events, so it could be a quiet day for GBP/USD.

In the US, last week ended with encouraging housing numbers. Building Permits jumped to 1.08 million, well above the estimate of 1.01 million. This was the highest level we’ve seen since December 2006. Housing Starts continues to move higher and climbed to 1.07M, compared to the estimate of 0.98M. This marked a five-month high. Meanwhile, UoM Consumer Sentiment dipped to 81.8 points, short of the estimate of 84.7 points.

Although US inflation numbers have not impressed, employment and manufacturing numbers looked sharp last Thursday. Unemployment Claims were outstanding, dropping to 297 thousand last week. This easily beat the estimate of 321 thousand and was the lowest level we’ve seen since May 2007. On the manufacturing front, the Philly Fed Manufacturing Index dipped to 15.4 points, but this was well above the estimate of 13.9 points. As well, Empire State Manufacturing Index climbed to 19.0 points, crushing the estimate of 5.5. This was the indicator’s best showing in two years.

The Bank of England released its quarterly inflation report last Wednesday. The markets were disappointed with the dovish tone of the report, which reiterated that with slack still present in the UK economy, the Bank has no plans to raise interest rates before 2015. Governor Mark Carney has spent a lot of effort trying to dampen market expectations about a rate hike, and he’ll likely have to continue doing so if the British economy continues to produce strong numbers and unemployment drops further.

British Claimant Change, one of the most important economic indicators, was respectable in April, but the markets were looking for more. The key indicator came in at -25.1 thousand, missing the estimate of -30.7 thousand. The unemployment rate remained pegged at 6.8%, matching the forecast. With speculation swirling about when the BOE might raise rates, every employment release will be under the market microscope.

GBP/USD for Monday, May 19, 2014

GBP/USD May 19 at 15:05 GMT

GBP/USD 1.6826 H: 1.6844 L: 1.6805

GBP/USD Technical

• GBP/USD is showing little movement on Monday. The pair dipped to a low of 1.6805 early in the European session.
• On the upside, 1.6896 continues to provide resistance. The key level of 1.70 follows.
• 1.6765 is providing weak support and was breached earlier in the day. The next support level is at 1.6705.

Further levels in both directions:

• Below: 1.6765, 1.6705, 1.6549 and 1.6436
• Above: 1.6896, 1.70, 1.7210, 1.7374 and 1.7538

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in Monday trading. This is consistent with the movement of the pair, as the pound has shown little movement. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar moving higher against the pound.

GBP/USD is listless on Monday. The pair has edged lower in the North American session.

GBP/USD Fundamentals

• There are no UK or US 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.