GBP/USD – Pound Fluctuates As US GDP Sparkles

The British pound is showing some volatility on Thursday. In the North American session, GBP/USD has moved higher and is trading in the high-1.60 range. In economic news, US Advance GDP was up sharply. Unemployment Claims also looked good, as the key employment indicator dipped lower last week, matching the forecast. In the UK, the Bank of England elected to maintain the interest rate and asset purchases facility levels.

There were no surprises from the BOE earlier on Thursday. The benchmark interest rate was kept at 0.50%, while asset purchase facility was maintained at 375 billion pounds. With the UK economy continuing to pick up steam, no changes were expected. The BOE has pegged interest rates at 0.50% since 2009. BOE head 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 BOE is forecasting that we won’t reach that point prior to 2016, but with the British economic indicators continuing to point upwards, many investors feel that this target will be reached much sooner.

US key releases continue to enjoy a strong week. Advanced GDP jumped 2.8% in Q3, hitting its highest levels since Q4 of 2011. The estimate stood at 2.0%, so the US economy is expanding faster than anticipated by the markets. Unemployment Claims dropped slightly last week, coming in at 336 thousand. This was the strongest release in five weeks. We’ll get another look at key employment data on Friday, as the US releases Non-Farm Payrolls. The markets are expecting a weak October release of 120 thousand, but the release is expected to be abnormally low due to layoffs during last month’s government shutdown.

British economic data continues to impress the markets. Manufacturing Production gained 1.2%, recovering nicely from a 1.2% decline last month. Industrial Production also looked sharp, rebounding from a decline of -1.1% in September, with a gain of 0.9% in October. There was more good news from Halifax HPI, which jumped from 0.3% to 0.7%, a three-month high. These strong gains point to continuing improvement in the UK economy, and the pound has taken advantage as it trades above the key 1.60 level. The British currency is enjoying an impressive run and has appreciated 5.6% against the US dollar since July.

GBP/USD for Thursday, November 7, 2013

GBP/USD November 7 at 16:25 GMT

GBP/USD 1.6076 H: 1.6092 L: 1.6010

GBP/USD Technical

• GBP/USD is showing some volatility in Thursday trading. The pair lost ground in the European session, falling close to the 1.60 line. GBP has rebounded in the North American session and touched a high of 1.6090.
• On the downside, 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 unchanged in Thursday trading. This is reflected in the current movement of the pair, as the pair has been fluctuating but has been unable to sustain momentum in either direction. Short positions continue to dominate the open positions, reflecting a trader bias towards the US dollar moving to higher ground.

The pound is showing some volatility on Thursday, and we could see this continue in the North American session.

GBP/USD Fundamentals

• 00:00 Bank of England Asset Purchase Facility. Estimate 375B. Actual 375B.
• 00:00 Bank of England Official Bank Rate. Estimate 0.50%. Actual -0.5%.
• 13:30 US Advance GDP. Estimate 2.0%. Actual 2.8%
• 13:30 US Unemployment Claims. Estimate 336K. Actual 336K.
• 13:30 US Advance GDP Price Index. Estimate 1.5%. Actual 1.9%.
• 15:00 US Mortgage Delinquencies. Actual 6.41%.
• 15:30 US Natural Gas Storage. Estimate 40B. Actual 35B.
• 18:30 FOMC Member William Dudley Speaks.
• 18:50 FOMC Member Jeremy Stein Speaks.
• 20:00 US Consumer Credit. Estimate 13.0B.

*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.