GBP/USD for Wednesday, November 20, 2013
The GBP/USD has run into a wall of resistance around 1.6150 and has just eased away from this level over the last 24 hours or so. Over the last few weeks or so the pound has bounced strongly off the support level at 1.59 to return back to its present levels. 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 1.5850only 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.
Back in the middle of August the pound 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.
A correction in British housing prices was the fastest-growing risk cited by financial firms in a survey published by the Bank of England on Monday. The biannual survey of economic concerns among banks, building societies, insurers and asset managers said the impact of low-interest rates on house prices had risen sharply as an area of concern since the May survey. "Perceived risk around property prices … rose, being mentioned by 36% of respondents, up 11 percentage points since the previous survey," the Bank of England said. "Concerns were concentrated almost exclusively on the residential market, where responses focused on the risk of a house price correction." The Bank feeds the survey into its financial stability work and so far has said it sees no general housing price bubble in the making. On Monday, the property website Rightmove said fears that Britain's housing stimulus schemes are inflating a property bubble look overblown.
GBP/USD Daily Chart" title="GBP/USD Daily Chart" height="249" width="550">
GBP/USD 4 Hourly Chart" title="GBP/USD 4 Hourly Chart" height="249" width="550">
GBP/USD November 20 at 02:15 GMT 1.6109 H: 1.6144 L: 1.6059
GBP/USD Technical" title="GBP/USD Technical" height="87" width="595">
During the early hours of the Asian trading session on Wednesday, the GBP/USD is easing back away from the resistance level at 1.6150 after recently bouncing off support around 1.6050. 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 1.62 and its highest point for the year. Current range: Just above 1.6000 around 1.6010.
Further levels in both directions:
• Below: 1.5900 and 1.5850.
• Above: 1.6150 and 1.6250.
GBP/USD Open Position Ratios" title="GBP/USD Open Position Ratios" height="64" width="574">
(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 below 30% as the GBP/USD runs into resistance at 1.6150. Trader sentiment remains heavily in favour of short positions.
Economic Releases
- 00:00 AU Internet Skilled Vacancies (Oct)
- 04:30 JP All Industry activity index (Sep)
- 09:30 UK BoE MPC minutes
- 13:30 CA Wholesale Sales (Sep)
- 13:30 US CPI (Oct)
- 13:30 US Retail Sales (Oct)
- 15:00 US Business inventories (Sep)
- 15:00 US Existing home sales (Oct)
- 19:00 US Fed releases minutes from prior (Oct 29-30) FOMC meeting