Where Is British Pound Heading If Scots Vote For Independence?

Where Is British Pound Heading If Scots Vote For Independence?

By: Oliver Miller | Where To Trade | On:18-09-2014 09:24
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Key Highlights

  • British pound traders are very nervous as we get close to the result of the Scottish vote.
  • Scottish Referendum is a major risk event, which can have a severe impact on the British pound and might increase volatility to a greater extent.
  • If there is a surprise on the way, then one might witness a monster movement in the pairs such as GBPUSD, EURGBP and GBPJPY.
  • UK retail sales registered an increase of 0.4% in August 2014.
  • US initial jobless claims fell by 36K from 316K to 280K.

US Initial Jobless Claims and Housing Starts

Earlier during the NY session, the US initial jobless claims figure was released by the US Department of Labor. The market was expecting it to fall by 11K in the week ending September 13. However, the outcome was a touch better, as the US advance figure for seasonally adjusted initial claims fell from 316K to 280K. There was a minor revision in the previous reading, which was revised up from 315K to 316K. The initial jobless claims were on the positive side, but there were a few other releases which affected the US dollar.

The US Housing Starts data was released by the US Census Bureau, at the Department of Commerce. The report mentioned that the US housing starts in August 2014, compared to the last month were at a seasonally adjusted annual rate of 956M. This was below the market’s expectation of 1.040M. In terms of percentage change it was 14.4% below the July estimate. Moreover, the building permits figure for August were also released, which missed the mark of 1.045M, and registered a seasonally adjusted annual rate of 998M.

So, the outcome was not encouraging for the US dollar bulls, and sellers were looking for a reason. They got one, and as a result the US dollar as of writing is trading lower against the Euro, the British pound and the New Zealand dollar.

The EURUSD pair traded lower during the London session, but it has gained traction during the NY session. The pair is now trading above the 1.2880 resistance area, which was a major hurdle for the pair intraday. However, there is another resistance level, which the Euro bulls need to keep an eye on is the 1.2920-30 area. This level acted as a support earlier, and likely to act as a resistance moving ahead.

UK Retail Sales Data

There is a lot going in the UK, as the Scottish independence is at stake and the market seems to be very choppy ahead of the result. There was an important economic release during the London session. The UK retail Sales was released by the National Statistics, which registered an increase of 0.4% in August 2014, compared with July 2014. This was in line with the expectation, but there were some revisions, which disappointed the market.

The GBPUSD pair has somehow managed to hold ground, and it is trading higher intraday with a test of 1.6440 level on the cards moving ahead if all goes well in Scotland.

Oliver Miller

Oliver Miller

"Patience is the key for success"

Oliver Miller is one of the best financial analyst with 18 years of online trading experience

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