GBP/USD – Pound Gets Boost From Strong Housing Data

GBP/USD is steady on Friday, following strong gains on Thursday, thanks to sharp gains in UK housing numbers. In the European session, the pair is trading at just above the 1.68 line. On Friday, British Consumer Inflation Expectations continued to lose ground, while the trade deficit widened. In the US, the markets await the key event of the week, Nonfarm Payrolls. As well, the Unemployment Rate will be released.

The British economy continues to move in the right direction. This week’s PMIs releases were not quite as high as expected, but the May PMI readings in the services, construction and manufacturing sectors all pointed to expansion. As widely expected, the BOE maintained its monetary course on Thursday, making no changes to interest rate levels or its asset purchase scheme. The benchmark interest rate remains at 0.50%, while QE continues to be pegged at 375 billion pounds. Speculation has increased about a rate increase as the British recovery deepens.

In the US, Friday’s spotlight is on employment releases. On Wednesday, ADP Nonfarm Payrolls slipped to 179 thousand, well off the estimate of 217 thousand. Unemployment Claims were not sharp, rising to 312 thousand, up from 300 thousand in the previous reading. The estimate stood at 309 thousand. Nonfarm Payrolls will be released on later on Friday, and a weak reading could weigh on the US dollar. We’ll also get a look at the Unemployment Rate, with little change expected.

US manufacturing and services sectors are pointed in the right direction, according the ISM Business Survey Committee. The ISM Manufacturing and Non-Manufacturing PMIs both improved in May. There was some confusion earlier in the week, as the Manufacturing PMI was based on faulty data, with the original report stating that the manufacturing index had softened in May. This was later corrected, as the index actually improved to 55.4 points in May, up from 54.9 points a month earlier. Meanwhile, the Non-Manufacturing PMI hit a nine-month high last month, climbing to 56.3 points, ahead of the estimate of 55.6 points.

GBP/USD for Friday, June 6, 2014

GBP/USD June 6 at 10:00 GMT

GBP/USD 1.6808 H: 1.6821 L: 1.6802

GBP/USD Technical

• GBP/USD is almost unchanged on Friday.
• 1.6896 is a strong resistance line.
• 1.6765 is providing weak support. 1.6705 follows.
• Current Range: 1.6765 to 1.6896

Further levels in both directions:

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

OANDA’s Open Positions Ratio

GBP/USD continues to point to gains in short positions in Friday trading. A majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar reversing direction and moving higher.

GBP/USD is steady on Friday. The pair is unchanged in the European session.

GBP/USD Fundamentals

• 8:30 British Consumer Inflation Expectations. Actual 2.6%.
• 8:30 British Trade Balance. Estimate -8.7B. Actual -9.6B.
• 12:30 US Nonfarm Employment Change. Estimate 214K.
• 12:30 US Unemployment Rate. Estimate 6.4%.
• 12:30 US Average Hourly Earnings. Estimate 0.2%.
• 19:00 US Consumer Credit. Estimate 15.3B.

*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.