GBP/USD – Sharp Losses After British GDP Estimate

The pound has posted sharp losses on Thursday, as GBP/USD is trading slightly above the 1.54 line in the North American session. In the UK, Second Estimate GDP posted a gain of 0.5%, matching the estimate. Over in the US, CPI declined by 0.7%, while Core CPI edged higher, posting a small gain of 0.2%. Unemployment Claims climbed to 313 thousand, well above expectations.

In the UK, Second Estimate GDP for Q1 came in at 0.5%, unchanged from an initial estimate a month earlier. Still, this was lower than the Final GDP  for Q3, which posted a gain of 0.7%. The pound reacted negatively after the GDP release, losing over 100 points.

As expected, US inflation indicators continue to struggle. CPI posted a third straight decline, coming in at -0.7%. This was very close to the forecast of -0.6%. Core CPI improved to 0.2%, edging above the estimate of 0.1%. On the employment front, there was disappointing news, as Unemployment Claims jumped to a 6-week high, coming in at 313 thousand. This was much higher than the estimate of 288 thousand.

Janet Yellen testified before Congressional committees on Tuesday and Wednesday, saying that the Fed was “unlikely” to raise interest rates in the next few months, given current economic conditions. Her remarks seemed aimed at quelling rising speculation about a rate hike sometime in mid-2015, which has helped boost the US dollar’s performance against its major rivals. Yellen noted that the continuing economic growth should lead to unemployment continuing to fall. Recent US data has been mixed, but employment numbers have generally been solid.

GBP/USD for Thursday, February 26, 2015

GBP/USD February 26 at 17:35 GMT

GBP/USD 1.5413 H: 1.5552 L: 1.5397

GBP/USD Technical

• GBP/USD was flat in the Asian session. The pair posted sharp losses in the European session. In the North American session, the pair is steady.
• 1.5392 has weakened in support as the pair trades at lower levels. 1.5282 is stronger.
• 1.5505 is a strong resistance line.
• Current range: 1.5392 to 1.5505

Further levels in both directions:

• Below: 1.5392, 1.5282, 1.5165, 1.5008 and 1.4873
• Above: 1.5505, 1.5642, 1.5786 and 1.5888

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Thursday. This is not consistent with the pair’s movement, as the pound has posted sharp losses. The ratio has a majority of long positions, indicative of trader bias towards the pound reversing ground and moving higher.

GBP/USD Fundamentals

• 9:30 British Second Estimate GDP. Estimate 0.5%. Actual 0.5%.
• 9:30 British Preliminary Business Investment. Estimate +2.0%. Actual -1.4%.
• 9:30 Index of Services. Estimate 0.7%. Actual 0.8%.
• 13:30 US Core CPI. Estimate 0.1%. Actual 0.2%.
• 13:30 US CPI. Estimate -0.6%. Actual -0.7%.
• 13:30 US Core CPI. Estimate 0.1%. Actual 0.2%.
• 13:30 US Unemployment Claims. Estimate 288K. Actual 313K.
• 13:30 US Core Durable Goods Orders. Estimate 0.6%. Actual 0.3%.
• 13:30 US Durable Goods Orders. Estimate 1.7%. Actual 2.8%.
• 14:00 US HPI. Estimate 0.5%. Actual 0.8%.
• 14:30 US Natural Gas Storage. Estimate -241B. Actual -219B.
• 18:00 US FOMC Member Dennis Lockhart Speaks.

*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.