GBP/USD – Little Movement Ahead of Non-Farm Payrolls

The British pound is showing little movement in Friday trading, as it trades in the high-1.60 range. Today’s highlight is Non-Farm Payrolls, and the markets are expecting a weak reading. There are two other key events out of the US – Unemployment Rate and UoM Consumer Sentiment. In the UK, today’s only release was Trade Balance. The indicator pointed to a wider trade deficit in October, the highest since September 2012.

US key releases continued to look sharp on Thursday. Advance GDP jumped 2.8%, in Q3, its sharpest gain since Q4 of 2011. This easily beat the estimate of 2.0%, pointing to faster economic expansion than anticipated by the markets. Unemployment Claims also looked solid, dropping slightly to 336 thousand, matching the forecast.

US employment numbers will be in the spotlight on Friday, with the release of Non-Farm Payrolls and the Unemployment Rate. NFP, a critical event which could move GBP/USD, is expected to fall to 121 thousand in October. However, it should be noted that the government shutdown in October resulted in some workers being removed from payrolls, which would explain the low October forecast. On Thursday, Unemployment Claims looked solid, coming in at 336 thousand, matching the forecast. An unexpectedly strong NFP release would likely fuel speculation of a possible QE tapering in December.

The BOE set interest rates and QE levels on Thursday and there were no surprises. The benchmark interest rate was kept at 0.50%, while asset purchase facility was maintained at 375 billion pounds. The BOE has pegged interest rates at 0.50% since 2009 and Governor Mark Carney has said that the Bank would not lower rates before the unemployment rate falls below 7.0%. Currently, unemployment is at 7.7%. The Bank is forecasting that we won’t reach that point prior to 2016, but with British economic indicators continuing to point upwards, many investors feel that this target will be reached much sooner.

GBP/USD for Friday, November 8, 2013

GBP/USD November 8 at 12:20 GMT

GBP/USD 1.6073 H: 1.6105 L: 1.6060

GBP/USD Technical

• GBP/USD has settled down on Friday. The pair pushed above the 1.61 line earlier in the European session before retracting.
• On the downside, the key levels of 1.6000 continues to provide support. This is followed by support at 1.5877.
• The pair is facing resistance at 1.6125. This line has weakened and could face pressure if the pound continues to move higher. This is followed by a resistance line at 1.6231, which has held firm since late October.
• Current range: 1.6000 to 1.6125.

Further levels in both directions:

• Below: 1.6000, 1.5877, 1.5756 and 1.5645 and 1.5537
• Above: 1.6125, 1.6231, 1.6300 and 1.6476

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to movement towards short positions in Friday trading. This is not reflected in the current movement of the pair, which is showing very little movement. Short positions continue to dominate the open positions, reflecting a trader bias towards the US dollar moving to higher ground.

After some volatility on Thursday, the pound has settled down on Friday. We could see some activity from GBP/USD in the North American session as the US releases Non-Farm Payrolls and key consumer confidence numbers later in the day.

GBP/USD Fundamentals

• 9:30 British Trade Balance. Estimate -9.1B. Actual -9.8B.
• 13:30 US Non-Farm Employment Change. Estimate 121K.
• 13:30 US Unemployment Rate. Estimate 7.3%.
• 13:30 US Average Hourly Earnings. Estimate 0.2%.
• 13:30 US Personal Spending. Estimate 0.3%.
• 13:30 US Core PCE Price Index. Estimate 0.1%.
• 13:30 US Personal Income. Estimate 0.3%.
• 14:55 US Preliminary UoM Consumer Sentiment. Estimate 74.6 points.
• 14:55 US Preliminary UoM Inflation Expectations.
• 18:10 President Barak Obama Speaks.
• 20:30 Fed Chairman Bernard Bernanke Speaks. Bernanke will address an IMF conference in Washington.

*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.