GBP/USD – Pound Uneventful, Markets Await US Jobless Claims

The pound is showing limited movement on Thursday, as GBP/USD is trading at 1.4830 in the European session. In economic news, the British Housing Equity Withdrawal was lower than expected. In the US, we’ll get a look at Unemployment Claims later in the day, the final major release of 2015.

In the US, Pending Home Sales was unexpectedly soft, posting a decline of 0.9%, compared to an estimate of a 0.6% gain. Recent housing indicators have missed expectations, pointing to weakness in the US housing sector. Meanwhile, CB Consumer Confidence sparkled in the December report, as the key indicator jumped to 96.5 points, up sharply from 90.4 points a month earlier. This easily beat the estimate of 93.9 points. This excellent reading followed a solid UoM Consumer Sentiment, which improved to 92.6 points, above the forecast of 92.1 points and marking a 4-month high. Consumer confidence indicators are closely monitored by analysts, as stronger consumer confidence often translates into increased consumer spending, a key driver of economic growth. Strong consumer demand has been an important factor in the strength of the US economy, which led to the historic rate hike by the Federal Reserve earlier in December.

The British pound has endured a miserable December, as the currency has lost about 250 points against the strong US dollar. The pair dipped below the 1.48 line earlier on Wednesday, the first time that has occurred since April. The British economy continues to show considerable slack, as inflation numbers remain negligible. CPI, the prime gauge of consumer inflation, has recorded a gain above 0.1 percent only once in all of 2015. Employment numbers have also weakened and missed expectations in November. The dollar received a boost from the historic Federal Reserve rate hike earlier in December, the first upward move in over nine years. Traders should keep in mind that the recent rate hike is expected to be the first in a series of incremental rate hikes over the course of 2016, and higher interest rates means that the US dollar will become even more attractive to investors, at the expense of other currencies, such as the British pound.

GBP/USD Fundamentals

Thursday (Dec. 31)

• 9:37 British Housing Equity Withdrawal. Estimate -10.5B. Actual -8.8B
• 13:30 US Unemployment Claims. Estimate 274K. Actual 287K
• 14:45 US Chicago PMI. Estimate 50.4 points
• 15:30 US Natural Gas Storage. Estimate -54B

*Key releases are highlighted in bold

*All release times are GMT

GBP/USD for Thursday, December 31, 2015

GBP/USD December 31 at 12:20 GMT

GBP/USD 1.4831 H: 1.4845 L: 1.4807

GBP/USD Technical

• 1.4813 remains busy and has switched to a support role. It was tested earlier and is a weak line.
• There is resistance at 1.4952
• Current range: 1.4813 to 1.4952

Further levels in both directions:

• Below: 1,4813, 1.4695, 1.4601 and 1.4465
• Above: 1.4952, 1.5026 and 1.5153

OANDA’s Open Positions Ratio

GBP/USD ratio is showing slight movement towards long positions,  which command a strong majority (63%). This is indicative of trader bias towards the pound moving higher against the dollar.

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.