GBP/USD for Tuesday, March 4, 2014
The last 24 hours has seen the GBP/USD fall sharply away from the resistance level at 1.6750. Over the last couple of weeks the GBP/USD has received solid support from the key 1.66 level after it retraced strongly from the resistance level at 1.68 and over the last week or so it had been edging higher slowly placing upwards pressure on a short term resistance level at 1.6750. In early February, the pound enjoyed a very healthy time moving well from the support level at 1.6250 through 1.6450 before pushing on to the multi-year high above 1.680. In late January the pound fell sharply and experienced its worst one week fall this year which resulted in it moving to the six week low near the support level at 1.6250. Over the last few months the pound has established and traded within a trading range roughly around the key level of 1.6450, whilst moving down to support at 1.6250 and up to 1.66 and beyond.
The 1.66 level has become quite significant and has loomed large throughout this year providing some resistance to higher prices. This level has resurfaced again as one of significance and it is now providing solid support. In late November it did well to break through the long term resistance level at 1.6250 which had established itself as a level of significance over the last few months. This level continues to play a role in providing support. In early November, the pound bounced strongly off the support level at 1.59 to return back to above 1.6250.
Towards the end of October the GBP/USD slowly drifted lower from the strong resistance level at 1.6250 and down to a three week low just around 1.5900 which was recently passed as the pound moved down towards 1.5850 only a week ago. For the week or so before that the pound moved well from the key level at 1.60 back up to the significant level at 1.6250, only again for this level to stand tall and fend off buyers for several days. Throughout September the pound rallied well and surged higher to move back up strongly through numerous levels which was punctuated by a push through to its highest level for the year just above 1.6250 several weeks ago. In the first week of October the pound was easing back towards 1.60 and 1.59 where it established a narrow trading range between before surging back to 1.6250 again.
UK manufacturing grew faster than expected in February, with employment in the sector expanding at its fastest pace in almost three years. The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) ticked up to 56.9 from 56.6 in January, higher than the 56.5 expected by economists. A figure above 50 indicates expansion. It is the eleventh consecutive month that UK manufacturing has expanded. Jobs growth in the sector rose at its fastest rate since May 2011. Rob Dobson, senior economist at Markit, said the sharp rise in job creation should also support the broader economic recovery. "The survey suggests we should expect another quarter of robust economic growth in the opening quarter of the year," he added.
GBP/USD Daily chart" title="GBP/USD Daily chart" height="233" width="474">
GBP/USD 4 hourly chart" title="GBP/USD 4 hourly chart" height="228" width="474">
GBP/USD March 3 at 22:40 GMT 1.6665 H: 1.6751 L: 1.6653
GBP/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.6600 | 1.6300 | 1.6250 | 1.6750 | 1.6800 | --- |
During the early hours of the Asian trading session on Tuesday, the GBP/USD is consolidating just above 1.6650 after dropping sharply from above 1.67. Current range: Trading just above 1.6650 around 1.6670.
Further levels in both directions:
• Below: 1.6600, 1.6300, and 1.6250
• Above: 1.6750 and 1.6800.
OANDA’s Open Position Ratios
GBP/USD Open Position Ratios" title="GBP/USD Open Position Ratios" height="28" width="474">
(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 above again 30% as the GBP/USD eases back a little from 1.38. Trader sentiment remains in favour of short positions.
Economic Releases
- 00:30 AU Building approvals (Jan)
- 00:30 AU Current Account (Q4)
- 00:30 AU Net Exports of GDP (Q4)
- 03:30 AU RBA - Overnight Rate (Mar)
- 09:30 UK CIPS/Markit Construction PMI (Feb)
- 10:00 EU PPI (Jan)
- 15:00 US IBD Consumer Optimism (Mar)