The GBP/USD has done very well to surge higher and move back through the 1.51 level however it has again run into the short term resistance level at 1.5150. It has experienced some difficulty at the 1.5150 level over the last week or so. It did well at the end of last week to reverse and recover a little back above 1.51 after having fallen strongly to a new two month low close to 1.50 in the couple of days prior. In the last 24 hours it has moved to a lower level and therefore a reached a new two month low close to 1.50 before the recovery. For a few days about a week ago it found some support around 1.5160 however this level has been clearly broken. The area around 1.5160 level has been providing some resistance of late as the pound continues to try and rally higher. The pound has now experienced a strong fall over the last few weeks. Prior to the last few weeks, 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. 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. The last few weeks has seen 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. Now that the pound has drifted back down below 1.54, it may provide some resistance again although presently it has some other levels to deal with beforehand.
Over the last month or so, the GBP/USD has been experiencing a variety of different levels which have played a role on the price action. Towards the end of March the GBP/USD was trading within a range roughly between 1.51 and 1.5250 and now on a couple of occasions it has been able to move outside that range and push higher. A few weeks ago, the 1.5350 level was one of significance as it offered resistance before the GBP/USD was able to move higher through to 1.56. 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 over the last couple of months, the GBP/USD had completely turned around its fortunes from earlier in the year, however it is starting to ease off and return most of the good work.
The GBP/USD lost around one cent on Monday, but has rebounded sharply and recovered these losses. However, the pound remains under pressure and has been no match for the surging US dollar, losing about four cents in the month of May. The British economy continues to stumble, and on Tuesday there was more bad news, as CBI Realized Sales plunged from -1 point to -11 points. The sharp drop surprised the markets, which had anticipated a gain of 4 points. The dismal reading points to weak sales, as the British consumer remains pessimistic and wary about opening her wallet and making purchases. Without strong consumer spending, the UK economy will have a tough time getting on track.
GBP/USD May 30 at 01:00 GMT 1.5130 H: 1.5146 L: 1.5008
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During the early hours of the Asian trading session on Thursday, the GBP/USD is consolidating in a very narrow trading range between 1.5120 and 1.5130 after having recently surged higher through the 1.51 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 above 1.5100 around 1.5130.
Further levels in both directions:
• Below: 1.5000.
• Above: 1.5150, 1.5300 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 moved back up above 50% after the GBP/USD has fallen down to the two month low near 1.50. Trader sentiment remains in favour of long positions.
Economic Releases
- 01:30 AU Building approvals (Apr)
- 01:30 AU Capital Expenditure (Q1)
- 05:45 CH GDP (Q1)
- 09:00 EU Business Climate Index (May)
- 09:00 EU Consumer Sentiment (May)
- 09:00 EU Economic Sentiment (May)
- 09:00 EU Industrial Sentiment (May)
- 12:30 CA Current Account (Q1)
- 12:30 CA Industrial & Raw product price index (Mar)
- 12:30 US Core PCE Price Index (Prelim.) (Q1)
- 12:30 US GDP Deflator (Prelim.) (Q1)
- 12:30 US Initial Claims (24/05/2013)
- 12:30 US Pending Home Sales (Apr)