It’s been a quiet start to the week, as GBP/USD trades in the mid-1.68 range in Monday’s North American session. In economic news, the US ISM Non-Manufacturing PMI looked sharp, climbing to a six-month high. There are no British releases on Monday, as the markets are closed for a holiday.
On Monday, the ISM Non-Manufacturing PMI, which provides data about the services sector, impressed the markets as it climbed to 55.2 points, beating the estimate of 54.3 points. This marked the indicator’s highest level since October, as it continues to point to expansion in the services sector. The 50-point level separates expansion from contraction.
US employment releases looked excellent on Friday. Nonfarm Payrolls jumped to 288 thousand, easily beating the estimate of 216 thousand. The Unemployment Rate kept pace, dropping to 6.3%, its lowest level since September 2008. At the same time, the participation rate in the labor force dropped, so slack remains in the US job market, despite the strong releases in April.
British releases looked sharp on Thursday, highlighted by an excellent reading from UK Manufacturing PMI. The index improved to 57.3 points, well above the estimate of 55.4 points. Nationwide HPI, an important gauge of activity in the housing industry, jumped 1.2%, crushing the estimate of 0.6%. There was more good news from Net Lending to Individuals, which posted its strong gain in five years. The indicator came in at GBP 2.9 billion, beating the estimate of 2.3 billion.
As expected, the Federal Reserve trimmed its QE program by $10 billion on Wednesday. This marks the fourth cut since December, reducing the asset purchase scheme to $45 billion/month. The tapers are no longer creating headlines as they did just a few months ago, and the dollar didn’t get any lift against its major rivals. What interested the markets more was the Fed statement that interest rates would remain low for a “considerable time” after QE ends. The markets expect QE to wind up before the end of the year, so we could see a rate hike in early 2015, depending of course, on the strength of the US economy and the job market.
GBP/USD for Monday, May 5, 2014
GBP/USD May 5 at 15:30 GMT
GBP/USD 1.6868 H: 1.6883 L: 1.6853
- GBP/USD is showing little movement in Monday trade.
- On the upside, 1.6896 remains a weak line. Next is the key resistance level of 1.70, which has held firm since August 2009.
- 1.6765 is providing strong support.
Further levels in both directions:
- Below: 1.6765, 1.6705, 1.6549 and 1.6416
- Above: 1.6896, 1.70, 1.7210 and 1.7374
OANDA’s Open Positions Ratio
GBP/USD ratio is almost unchanged in Monday trading. This is consistent with the lack of movement exhibited by the pair. A large majority of the open positions in the GBP/USD ratio are short, indicative of the dollar breaking out and posting gains.
The pair has started the week on a quiet note and GBP/USD is unchanged in the North American session.
- 13:45 US Final Services PMI. Estimate 54.2 points. Actual 55.0 points.
- 14:00 US ISM Non-Manufacturing PMI. Estimate 54.3 points. Actual 55.2 points.
- Tentative – US Loan Officer Survey.
*Key releases are highlighted in bold
*All release times are GMT