GBP/USD

GBP/USD is almost unchanged on Monday, as the pair trades at the 1.5340 in the European session. The pound had a rough week, losing about 120 points against the dollar. In the UK, BBA Mortgage Approvals and CBI Industrial Order Expectations both missed their estimates. Today’s only US release is New Home Sales. Traders should keep a close eye on three market-mover events on Tuesday – British Preliminary GDP, US Core Durable Goods Orders and US CB Consumer Confidence.

British releases started off the news trading week on the wrong foot. BBA Mortgage Approvals dipped to 44.5 thousand, short of the forecast of 46.2 thousand. CBI Industrial Order Expectations slumped badly, with a reading of -18 points, its lowest level since July 2013. This points to weaker manufacturing growth due to less demand for British products both domestically and abroad. On Tuesday, British Preliminary GDP for the third quarter will be released. The key indicator is expected to show a gain of 0.6%, and a weaker reading could send the pound to lower levels.

Last week, BOE Governor Mark Carney weighed in on the “Brexit” debate regarding the UK continuing to remain a member of the European Union. Carney said that he was in favor of the UK staying in the bloc, noting that the UK had benefited from the continent’s free movement of goods, services and capital. Not surprisingly, Finance Minister George Osborne was quick to praise Carney’s remarks. The British government has promised a referendum on whether the country should remain in the EU in 2017, and a public stance by the BOE in favor of the UK staying in the EU will be important for the “Yes” vote.

There was positive news out of the US on Thursday, as Unemployment Claims, a key release, came in at 259 thousand, beating the estimate of 266 thousand. This was slightly higher than the previous reading of 255 thousand, but marked the third straight week that the indicator beat the forecast. The four-week moving average of claims, which reduces the volatility of the weekly jobless reports, is currently at its lowest level since 1973. These figures point to a stronger US labor market, but the next big test comes in early November, with the publication of Nonfarm Payrolls. Meanwhile, Existing Housing Sales had a banner September, improving to 5.55 million, crushing the estimate of 5.38 million. We’ll get a look at New Home Sales later on Monday.

Recent US data has not been has strong as hoped, with key numbers sending a mixed message about the health of the economy. This has reduced the likelihood of a rate hike by the Federal Reserve before the end of 2015. The markets remain frustrated about the Fed’s lack of communication with the markets, as FOMC members continue to send out contradictory messages about the Fed’s plans. Still, an improvement in US numbers, especially employment and consumer indicators, could quickly revive speculation about a rate hike and boost the US dollar. This week promises to be interesting, as the Federal Reserve issues a policy statement after its monthly meeting. This will be followed by the release of the Advance GDP report, a market-mover that could have a strong impact on the currency markets.

GBP/USD Fundamentals

Monday (Oct. 26)

• 9:30 British BBA Mortgage Approvals.  Estimate 46.2K. Actual 44.5K
• 11:00 British CBI Industrial Order Expectations. Estimate -8 points. Actual -18 points
• 14:00 US New Home Sales. Estimate 546K

Upcoming Events

Tuesday (Oct. 27)

• 9:30 British Preliminary GDP. Estimate 0.6%
• 12:30 US Core Durable Goods Orders. Estimate 0.0%
• 14:00 US CB Consumer Confidence. Estimate 102.5 points

*Key releases are highlighted in bold

*All release times are GMT

GBP/USD for Monday, October 26, 2015

GBP/USD October 26 at 11:45 GMT

GBP/USD 1.5342 H: 1.5349 L: 1.5306

GBP/USD Technical

• GBP/USD has shown limited movement in the Asian and European sessions.
• 1.5485 is strong resistance line.
• 1.5341 is under strong pressure in support and could break during the day.
• Current range: 1.5341 to 1.5485

Further levels in both directions:

• Below: 1.5341, 1.5269, 1.5163 and 1.5026
• Above: 1.5485, 1.5590 and 1.5660

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged on Monday. The ratio remains close to an even split between short and long positions, pointing to a lack of trader bias as to what to expect from GBP/USD.