GBP/USD: Trading the US CB Consumer Confidence Oct 2014

The Conference Board Consumer Confidence Index is based on a monthly survey of about 5,000 households regarding their opinion of the economic conditions and the overall economic climate. A reading which is higher than expected is bullish for the US dollar.

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Tuesday at 14:00 GMT.

Indicator Background

The indicator is an important gauge of consumer confidence. Increased consumer optimism usually translates into stronger spending, which is beneficial to the economy. An unexpected reading can affect the direction of GBP/USD.

The indicator slipped to 86.0 points last month, compared to 92.4 points in the previous release. This was well short of the estimate of 92.2 points. The estimate for the upcoming release stands at 87.4 points.

Sentiments and levels

The US economy continues to roll, and a strong GDP release could bolster the US dollar. As well, the Fed is likely to wrap up QE this week. This significant step should put the markets in a positive mood about the US dollar, as the focus shifts to the timing of a rate hike, which is widely expected in 2015. The UK economy is also moving nicely on the road to recovery, and the BoE is also expected to raise rates next year. So, the overall sentiment is neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6465, 1.6310, 1.6250, 1.6131, 1.6006 and 1.5909

5 Scenarios  

1. Within expectations: 84.0 to 91.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 91.1 to 95.0: An unexpected higher reading can push GBP/USD below one support level.
3. Well above expectations: Above 95.0: A sharp increase in consumer confidence could propel the pair below two or more support levels.
4. Below expectations: 80.0 to 83.9: A reading lower than forecast could send GBP/USD above one resistance line.
5. Well below expectations: Below 80.0: In this outcome, the pair could push above two or more important resistance lines.

For more about the pound, see the GBP/USD forecast.

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