GBP/USD – Pound Steady As BOE Holds Course

The British pound is steady in Thursday trading, as the pair trades in the mid-1.64 range in the North American session. Taking a look at economic releases, the BOE maintained the QE and interest rate levels for January. British Trade Balance showed a slight improvement, as the trade deficit narrowed. In the US, Unemployment Claims continues to look solid and beat the estimate.

US employment releases have started 2014 on a positive note. Unemployment Claims dropped to 330 thousand, down from 339 thousand. This beat the estimate of 337 thousand. Earlier in the week, ADP Non-Farm Payrolls looked excellent, as the indicator climbed to 238 thousand, hitting a two-year high. With another QE taper in January a strong possibility, every employment release will be under the market microscope and could impact on the currency markets.

There were no surprises from the BOE on Thursday, which set the QE and interest rate levels for January. QE remains at 375 billion pounds, while the benchmark interest rate stays at 0.50%, where it has been pegged since 2009. The BOE has said that it will not raise rates before the unemployment level falls below 7%, but with that target within reach sometime in 2014, much earlier than forecast by the BOE, the central bank may lower the unemployment rate threshold to 6.5%.

The British economy has been picking up steam, and this upturn was reflected in the BOE Credit Conditions Survey, which the Bank releases each quarter. The report found that mortgage loans were up significantly in the last quarter of 2013, and that British lenders expect a significant increase in the availability of mortgages and business loans in the first quarter of 2014. An increase in consumer and business credit levels should translate into more spending and fuel economic activity.

GBP/USD for Thursday, January 9, 2014

GBP/USD January 9 at 16:30 GMT

GBP/USD 1.6466 H: 1.6498 L: 1.6442

GBP/USD Technical

• GBP/USD has edged higher in Thursday trading. The pair came close to the 1.65 line late in the European session, touching a high of 1.6498.
• 1.6549 is the next line of resistance. This is followed by resistance at 1.6705, which has remained intact since May 2011.
• On the downside, 1.6416 continues to provide support. This is followed by stronger support at 1.6329.
• Current range: 1.6416 to 1.6549

Further levels in both directions:

• Below: 1.6416, 1.6329, 1.6231, 1.6125 and 1.6000
• Above: 1.6549, 1.6705, 1.6964 and 1.7182

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions in Thursday trading. This is reflected in what we’re seeing from the pair, as the pound has posted slight gains against the dollar. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar reversing directions and moving to higher ground.

The pound has posted modest gains, continuing the trend we saw on Wednesday. The pair is steady early in the North American session.

GBP/USD Fundamentals

• 9:30 British Trade Balance. Estimate -9.4B. Actual -9.4B.
• 12:00 BOE Asset Purchase Facility. Estimate 375B. Actual 375B.
• 12:00 BOE Official Bank Rate. Estimate 0.5%. Actual 0.5%.
•  12:30 US Challenger Job Cuts. Actual -5.9%.
• 13:30 US Unemployment Claims. Estimate 337K. Actual 330K.
• 15:30 US Natural Gas Storage. Estimate -147B. Actual -157B.
• 18:01 US 30-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.