GBP/USD – Pound Punches Past 1.58 After Sharp Employment Data

The British pound continues to hammer away at the US dollar in Wednesday trading. GBP/USD is trading above the 1.58 line in the North American session. The pound has gained three cents against the dollar in September and is at its highest levels since early February. British Claimant Count Change dropped to lowest level in over three years, and the Unemployment Rate dropped as well. In the US, President Obama addressed the nation about the Syrian crisis, saying that the US was postponing military action while there was a possibility that a diplomatic solution could be reached. There are no major US releases on Wednesday.

British releases have looked sharp and on Wednesday, employment releases continued the positive trend. Claimant Count Change posted another strong drop of -32.6 thousand. This was the sharpest drop since April 2010, and easily surpassed the estimate of -21.2 thousand. The Unemployment Rate dipped from 7.8% to 7.7%, its lowest rate this year. The pound was buoyed by these sharp numbers and has gained close to one cent against the retreating dollar on Wednesday.

The Syrian saga has taken on a new twist, as the US and Russia work on a diplomatic solution to the crisis. Under the proposed plan, Syria would destroy its entire arsenal of chemical weapons. President Obama spoke on US television on Monday and said that he would delay any military action as long as a diplomatic solution was possible, but that a strike against Syria was still on the table. If the diplomatic efforts gain momentum and the crisis eases, we could see the safe-haven dollar lose ground.

QE tapering continues to be a hot topic, but recent weak US employment numbers may cause a delay. Tuesday’s JOLTS Job Openings looked weak, coming in at 3.69 million, way off the estimate of 3.96 million. Last week’s Non-Farm Payrolls came in at 169 thousand, missing the estimate of 178 thousand. The Unemployment Rate dropped from 7.4% to 7.3%, but this improvement is not all that significant, given the low participation rate in the labor force. There has been talk of the Fed reducing QE as early as September, but we’re unlikely to see any action if employment numbers don’t improve. Chicago Fed President Charles Evans has hinted that we could see some action on this front from the Fed before the end of the year.

GBP/USD for Wednesday, September 11, 2013

GBP/USD September 11 at 15:10 GMT

GBP/USD 1.5807 H: 1.5826 L: 1.5719

GBP/USD Technical

• GBP/USD has climbed sharply on Wednesday, crossing above the 1.58 line early in the European session.
• The pair is facing resistance at 1.5877. This is followed by resistance at the significant line of 1.6000. This line has remained intact since January.
• On the downside, the GBP/USD is receiving support at 1.5756. This is followed by a stronger support level at 1.5756.
• Current range: 1.5756 to 1.5877

Further levels in both directions:

• Below: 1.5756, 1.5645, 1.5527, 1.5432 and 1.5309
• Above: 1.5877, 1.6000 and 1.6125 and 1.6231

OANDA’s Open Positions Ratio

The GBP/USD ratio is unchanged in Wednesday trading. This is not reflected in the pair’s current movement, as the pound continues to post gains. The ratio is comprised of a majority of short positions, which reflects a strong bias in favor of the US dollar reversing direction and posting gains against the pound.

The pound keeps on rolling and has pushed above the 1.58 line in Wednesday trading. With no major releases out of the US today, we could see GBP/USD trade quietly during the North American session.

GBP/USD Fundamentals

• 8:30 British Claimant Count Change. Estimate -21.2K. Actual -32.6K.
• 8:30 British Average Earnings Index. Estimate 1.3%. Actual 1.1%.
• 8:30 British Unemployment Rate. Estimate 7.8%. Actual 7.7%.
• 14:00 US Wholesale Inventories. Estimate 0.3%. Actual 0.1%.
• 14:30 US Crude Oil Inventories. Estimate -2.2M. Actual -0.2M.
• 17:00 US 10-year Bond Auction.

*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.