GBP/USD

GBP/USD is trading close to the 1.68 line on Thursday, as the pair continues to have an uneventful week with limited movement. In economic news, key US releases were a mix. Unemployment Claims came in well above the estimate, disappointing the markets. Meanwhile, Core Durable Goods Orders looked very sharp, jumping to an eighteen-month high. In the UK, CBI Realized Sales bounced back in March and posted a sharp gain.

On Thursday, key US releases pointed in both directions. Unemployment Claims jumped to 329 thousand, its highest level since mid-February. This was much higher than the estimate of 309 thousand. There was much better news from the manufacturing front, as Core Durable Goods Orders jumped 2.0% in March, crushing the estimate of 0.6%. This was the key indicator’s best showing since September 2o12. Durable Goods Orders kept up the fast pace with a sharp gain of 2.6%, beating the estimate of 2.1%.

There is no arguing that the British economy has enjoyed a strong recovery, but that does not mean that policymakers at the BOE see eye-to-eye on the health of the economy or inflation. The minutes of the previous policy meeting indicated that Monetary Policy Committee members were “uncertain” about the amount of spare capacity in the economy and the medium-term inflation outlook. Importantly, the MPC voted unanimously to maintain the benchmark interest rate at 0.50%. With the unemployment rate down to 6.9%, there is growing speculation that we could see a rate hike as early as next spring, although the BOE has done its best to dampen expectations of a rate increase.

In the US, New Home Sales was a disaster, as the key indicator plunged to 384 thousand in March, down from 440 thousand in the previous release. The weak reading was nowhere near the estimate of 455 thousand, and marked an eight-month low for the key housing indicator. The housing sector is showing signs of weakness, as both New Home Sales and Existing Home Sales have been on a sustained downward trend.

The markets haven’t reacted to events in Ukraine so far, but that could change if the violence in the east of the country worsens. Russian President Vladimir Putin has threatened to act on his “right” to invade Ukraine, and has also given the country an ultimatum regarding its gas debt. The gas supply from Russia to western Europe is in danger, and if the situation spills out of control, we could see a sharp response from the markets. US Vice-President Joe Biden is in Kiev for a symbolic visit. The West doesn’t have many cards to play against Russia, so every move by Putin will be scrutinized and could impact on the markets.

GBP/USD for Thursday, April 24, 2014

GBP/USD April 24 at 15:20 GMT

GBP/USD 1.6800 H: 1.6808 L: 1.6766

GBP/USD Technical

• GBP/USD has pushed up to the 1.68 line on Thursday.
• 1.6765 continues to provide support. This is a weak line which could see pressure if the pound loses ground. The next support line is 1.6705.
• 1.6896 is a strong resistance line, protecting the key 1.70 level.

Further levels in both directions:

• Below: 1.6765, 1.6705, 1.6549 and 1.6416
• Above: 1.6896, 1.70, 1.7210 and 1.7374.

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Thursday, reversing the direction seen a day earlier. This is consistent with the movement of the pair, as the pound has posted modest 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 continuing to post gains.

The pound continues to trade close to the 1.68 line, as the pound remains at high levels. GBP/USD is unchanged in the North American session.

GBP/USD Fundamentals

• 10:00 British CBI Realized Sales. Estimate 18 points. Actual 30 points.
• 12:30 US Core Durable Goods Orders. Estimate 0.6%. Actual 2.0%
• 12:30 US Durable Goods Orders. Estimate 2.1%. Actual 2.6%.
• 12:30 US Unemployment Claims. Estimate 309K. Actual 329K.
• 14:30 US Natural Gas Storage. Estimate 40B. Actual 49B.

*Key releases are highlighted in bold

*All release times are GMT