Throughout the second half of August the GBP/USD slowly but surely drifted lower away from the resistance level 1.57 and back down below 1.55 however this all now seems a distant memory. In the last few weeks it has rallied well and surged higher to move back up strongly through numerous levels which has now been punctuated by a surge higher in the last 24 hours up to an eight month high above 1.6150. The 1.57 level was likely to provide some resistance but it didn’t hold up progress higher that much. It did stall around 1.59 to 1.5950 for a few days before the recent surge higher. A few weeks ago it fell down to a two week low near 1.54 before rallying back towards 1.5550. The week before it did well to maintain its level above the key 1.56 level and in the process moving to a new two month high above 1.57 which has now been surpassed by the present high. It immediately retreated strongly but continued to receive solid support from the 1.56 level before closing below at the end of that week.
Several weeks ago it surged higher to through the resistance level at 1.56 to a then two month high around 1.5650, before spending the next few days consolidating and trading within a narrow range around 1.5650, receiving support from the key 1.56 level. A couple of months ago the resistance level at 1.54 was proving to be quite solid, and once it broke through the pound surged higher to a new seven week high near 1.56 in a solid 48 hour period run. In the week leading up to this the pound had recovered strongly and returned to the previous resistance level at 1.54 after the week earlier undoing some of its good work and falling away sharply from the resistance level at 1.54 back down to around 1.5150 and a two week low. A few weeks ago the 1.54 resistance level stood firm and the pound fell away heavily, however the 1.51 support level proved decisive and helped the pound rally strongly.
Earlier in July after having done very little for about a week, the GBP/USD started to move and surge higher and move through the 1.52 and 1.53 levels to the one month high above 1.54. Prior to the move higher, it moved very little as it found solid support at 1.51 and traded within a narrow range above this level. It established a trading range in between 1.51 and 1.52 after it took a breather from its excitement just prior when it experienced a strong surge higher moving back to within reach of the 1.52 level from below 1.49, all in 24 hours. About a month ago it did well to climb off the canvas and move back above 1.49 and towards 1.50 again before seeing the pound reverse and head back down below 1.49 to reach a new multi-year low near 1.48. It experienced sharp falls moving from 1.53 down to the key long term level of 1.50 and then through 1.49. That movement saw it resume its already well established medium term down trend from the second half of June and move it to a four month low.
The Bank of England moved further away from adding more stimulus to Britain’s economy this month and seemed less concerned by rising market borrowing costs, minutes of its latest policy meeting showed on Wednesday. The two current policymakers who in previous months had seen a compelling case for more asset purchases to stimulate activity retreated from this position at the September meeting following signs of strengthening economic growth. The nine-member Monetary Policy Committee (MPC) also chose not to repeat July and August’s warning that bond market yields were rising faster the data warranted – a rise the Bank had previously worried might be a headwind to the recovery. It said “promising” data over the past month meant output in the third quarter was likely to be around 0.7 percent, higher than the 0.5 percent it forecast in August. It also predicted growth could strengthen further towards the end of the year.
GBP/USD September 19 at 00:55 GMT 1.6134 H: 1.6163 L: 1.5900
During the early hours of the Asian trading session on Thursday, the GBP/USD is consolidating in a narrow range right around 1.6130 after having surged higher to an eight month higher in the last half day. Since the middle of June the pound has fallen very strongly from the resistance level at 1.57 back down towards the long term key level at 1.50 and is now enjoying a solid resurgence over the last couple of months moving back to above 1.61 and its highest point since January. Current range: Right around 1.6130.
Further levels in both directions:
• Below: 1.5800 and 1.5400.
• Above: 1.6150.
(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 remained under 30% as the GBP/USD has surged to above 1.61. Trader sentiment remains heavily in favour of short positions.
Economic Releases
- 04:30 JP All Industry activity index (Jul)
- 05:00 JP Leading indicator (Final) (Jul)
- 08:30 UK Retail Sales (Aug)
- 12:30 CA Wholesale Sales (Jul)
- 12:30 US Current Account (Q2)
- 12:30 US Initial Claims (13/09/2013)
- 14:00 US Existing home sales (Aug)
- 14:00 US Leading Indicator (Aug)
- 14:00 US Philadelphia Fed Survey (Sep)