MarketPulse | Apr 03, 2014 12:28PM ET
The GBP/USD lost ground on Thursday, as the pair dropped below the 1.66 level. In economic news, UK Services PMI fell short of the estimate. In the US, Trade Balance worsened and missed the estimate. Unemployment Claims also missed the forecast, while ISM Non-Manufacturing PMI improved in March.
British PMIs are an important gauge of the health and direction of the UK economy. It was a clean sweep for this week's PMIs, but not in a positive sense. All three key indicators fell short of their estimates in March, which is bound to raise concern about the economy. On Thursday, Services PMI dropped for a fifth straight month, coming in at 57.6 points. This was short of the estimate of 58.2 points. The good news is that the PMIs continue to point to expansion, as all three remain well above the 50-point level. Still, if key British indicators continue to miss expectations, the pound could hit more turbulence.
US Unemployment Claims disappointed, as the key indicator jumped to 326 thousand last week, up from 311 thousand in the previous release. This missed the estimate of 319 thousand. Earlier in the week, ADP Nonfarm Payrolls jumped to 191 thousand, up from 139 thousand a month earlier. This practically matched the estimate of 192 thousand. We'll get a look at the Unemployment Rate and NFP, one of the most important economic indicators, on Friday.
Earlier in the week, Fed chair Janet Yellen said that inflation and employment levels needed to improve considerably, and the Federal Reserve would continue to provide monetary stimulus for some time. Currently, the Fed is purchasing $55 billion in assets under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence. At the same time, the Federal Reserve has stated that it has no plans to raise interest rates until sometime in 2015.
GBP/USD Technicals
S3 | S2 | S1 | R1 | R2 | R3 |
1.6329 | 1.6416 | 1.6549 | 1.6705 | 1.6765 | 1.6896 |
Further levels in both directions:
OANDA's Open Positions Ratio
GBP/USD ratio is pointing to gains in short positions on Thursday. This is consistent with what we are seeing from the pair, as the pound has lost ground. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar continuing to make inroads against the pound.
The pound has lost ground on Thursday and is trading in the high-1.65 range. GBP/USD remains under pressure in the North American session.
GBP/USD Fundamentals
*Key releases are highlighted in bold
*All release times are GMT
Original Post
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.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.