After a really solid last week or so, the GBP/USD has continued its form and moved through to a new four week high just above 1.54. Only a few days ago it experienced its strongest 24 hour period in a while as it surged up through 1.53 to within reach of 1.54 and a new three week high at the time. At the end of last week the pound did well to surge higher and move back through the 1.52 before easing off slightly. In doing so, it moved through 1.5150 which it had previously experienced some difficulty with over the last week or so. Over the last couple of weeks it has also received solid support from 1.50 which has given it the opportunity to rally higher and move back above 1.52 again. During last week however, it did move to a lower level and therefore reached a new two month low close to 1.50 before the strong surge higher over the last week. For a few days a couple of weeks ago it found some support around 1.5160 however this level was clearly broken as it fell down towards 1.50. Then throughout last week the area around the 1.5160 level was providing some resistance as the pound continued to try and rally higher.
There might be some signs now that it is recovering from its horrible May which saw it drop from 1.56 down to the two month low near 1.50. Moving through to 1.54 sees the pound having regained more than half of the previous losses. Prior to the last month, the pound enjoyed a strong couple of weeks and move to new highs above 1.56. It experienced all sorts of bother at 1.56 as it made several pushes to this significant level however it was turned away with excessive supply. For about a week it ran into a wall of resistance right around the 1.56 level, as you can see in the middle of the daily chart below. The pound had enjoyed a very solid couple of weeks moving from the support level at 1.52 to reach new highs at 1.56, a new ten week high. Back around mid April the pound experienced solid support at 1.52 for about a week which greatly assisted the recent surge higher, and recently this level was called upon again to offer some support and a soft landing, however the pound fell strongly through it on its way down to near 1.50. A couple of weeks ago, we saw some evidence that the decline had been slowed down as it traded around 1.52 for about a week whilst receiving solid support from around 1.5160.
Throughout the month of May saw the pound fall strongly and return almost all of its gains from the few weeks before that. About a month ago the 1.54 level provided a little piece of resistance and this level has since been broken as it offered limited support. In early March the pound moved to new lows around 1.4830 from a starting point near 1.64 at the beginning of the year. With the surge higher throughout March and April, the GBP/USD had completely turned around its fortunes from earlier in the year, however May saw ease off and return most of the good work.
GBP/USD has taken advantage of solid British numbers, climbing close to two cents this week. It was a clean sweep for British PMIs this week, as Services PMI looked sharp on Wednesday. The PMI has been above the 50-point level throughout 2013, marking ongoing expansion in the services sector. The index has been moving upwards, and continued the trend in May, climbing from 52.9 to 54.9 points. This easily beat the estimate of 53.1 points. Earlier in the week, the Manufacturing and Construction PMIs for May showed improvement as both indexes climbed above the 50 line. The solid PMI releases have raised hopes that the underperforming British economy is finally headed in the right direction.
GBP/USD June 6 at 01:45 GMT 1.5386 H: 1.5413 L: 1.5306
During the early hours of the Asian trading session on Thursday, the GBP/USD is just easing away from the 1.54 level which had rested on for the last few hours, after having recently moved higher and moved through the 1.54 level. Throughout the first part of this year, the pound fell very strongly from the key resistance level at 1.63 level down to levels not seen in two and a half years and has done well the last month to rally well and move back up above 1.56. Current range: Just below 1.54.
Further levels in both directions:
• Below: 1.5200 and 1.5000.
• Above: 1.5400 and 1.5600.
(Shows the ratio of long vs. short positions held for the GBP/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The GBP/USD long positions ratio has just slipped below 50% as the GBP/USD continues to move higher. Trader sentiment remains in favour of long positions.
Economic Releases
- 01:30 AU Trade Balance (Apr)
- 11:00 UK BoE MPC – APF Total (Jun)
- 11:00 UK BoE MPC – Base Rate (Jun)
- 11:45 EU ECB – Interest Rate (Jun)
- 12:30 US Initial Claims (01/06/2013)
- 14:00 CA Ivey PMI (May)