GBP/USD – Strong Gains on BOE Inflation Report, Weak US Data Slides

The pound has posted strong gains on Thursday, as GBP/USD has gained about 140 points. The pair is trading in the high-1.53 range in the North American session. On the release front, the BOE stated that there is no danger of deflation and raised its GDP forecasts. In the US, major releases were dismal. Core Retail Sales declined by 0.9% and Retail Sales followed suit with a drop of 0.8%. Unemployment Claims climbed sharply to 304 thousand.

In the US, retail sales pointed to sharp declines. Core Retail Sales declined by 0.9%, while Retail Sales dropped by 0.8%. Both were well off their estimates of -0.4%. There was no relief from unemployment claims, which jumped to 304 thousand, compared to 284 thousand in the previous reading. The markets had expected a stronger reading of 282 thousand. The Canadian dollar took advantage of the weak US data and has gained over 100 points on the day.

Earlier in the week, British Manufacturing Production, a key indicator, slipped to 0.1% in December, down from 0.1% a month earlier. The markets had expected a gain of 0.3%. There was no relief from British Industrial Production, which came in at -0.2%, marking a third straight decline. Meanwhile, the NIESR GDP Estimate, which helps track GDP on a monthly basis, posted a strong gain of 0.7% in the January report.

GBP/USD for Thursday, February 12, 2015

GBP/USD February 12 at 16:25 GMT

GBP/USD 1.5387 H: 1.5389 L: 1.5209

GBP/USD Technical

• GBP/USD was flat during the Asian session. GBP/USD posted strong gains in the European session, breaking resistance at 1.5282. The pair continues to move upwards in North American trade.
• 1.5282 has reverted to a support role as the pound trades at higher levels.
• 1.5392 is under strong pressure. Will the pair break past this line in the North American session? 1.5505 is stronger.
• Current range: 1.5282 to 1.5392

Further levels in both directions:

• Below: 1.5282, 1.5165, 1.5008, 1.4873 and 1.4781
• Above: 1.5392, 1.5505, 1.5642 and 1.5786

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Thursday, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as strong gains by the pound have led to long positions being covered and hence a percentage increase of open short positions. The ratio has a majority of long positions, indicative of trader bias towards the pound continuing to move higher.

GBP/USD Fundamentals

• 00:01 British RICS House Price Balance. Estimate 10%. Actual 7%.
• 10:30 British BOE Inflation Report.
• 10:30 British Inflation Letter.
• 13:30 US Core Retail Sales. Estimate -0.4%. Actual -0.9%.
• 13:30 US Retail Sales. Estimate -0.4%. Actual -0.8%.
• 13:30 US Unemployment Claims. Estimate 282 thousand. Actual 304K.
• 15:00 US Business Inventories. Estimate 0.2%. Actual 0.1%.
• 15:30 US Natural Gas Storage. Estimate -165B. Actual -160B.
• 18:01 US 30-year Bond Auction.

*Key releases are highlighted in bold

*All release times are GMT

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