GBP/USD – Pound Steady As Construction PMI Dips

GBP/USD is steady on Tuesday, as the pair trades in the mid-1.67 range late in the European session. On the release front, British Construction PMI slipped in April, dropping to a seven-month low. Nationwide HPI dropped to 0.7% in May, matching the forecast. In the US, there are just three releases, highlighted by Factory Orders.

British Construction PMI dipped to an even 60.0 points in May, dropping from 60.8 points a month earlier. Although this points to strong growth in the construction sector, this was the lowest reading since October. The markets had expected more, with an estimate of 61.2 points. Nationwide HPI also softened in May, coming in at 0.7%, matching the forecast.

It’s not often that a key indicator drops and magically recovers a day later. However, this was the case with ISM Manufacturing PMI. The well-respected ISM Business Survey Committee reported on Monday that the key index had softened in May, but has since corrected its reading. The index actually improved to 55.4 points in May, up from 54.9 points a month earlier. As well, Final Manufacturing PMI and ISM Manufacturing Prices improved. This points to an expanding manufacturing sector, which is good news for the recovery. The markets will be hoping for more good news from today’s highlight, Factory Orders.

Last week’s US data was a mix. Preliminary GDP, the primary gauge of economic activity, posted its first decline since Q2 of 2009. The indicator came in at -1.0% for Q1, worse than the estimate of -0.6%. Harsh winter conditions took their toll on the economy in Q1, and analysts expect a rebound in Q2. After a strong gain in March, Pending Home Sales softened, coming in at 0.4%. This was nowhere near the gain of 1.1%. On a brighter note, Employment Claims dropped to 300 thousand, easily beating the estimate of 321 thousand. As well, CB Consumer Confidence remains at high levels.

 

GBP/USD for Tuesday, June 3, 2014

GBP/USD June 3 at 13:15 GMT

GBP/USD 1.6752 H: 1.6784 L: 1.6740

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6436 1.6549 1.6705 1.6765 1.6896 1.700

 

  • GBP/USD has edged higher on Tuesday.
  • 1.6765 is a weak resistance line. 1.6896 is stronger.
  • 1.6705 is providing support. 1.6549 follows.
  • Current Range; 1.6705 to 1.6765

Further levels in both directions:

  • Below: 1.6705, 1.6549, 1.6436 and 1.6346
  • Above: 1.6765, 1.6896, 1.70, 1.7210 and 1.7374

 

OANDA’s Open Positions Ratio

GBP/USD ratio is showing little change in Tuesday trade. This is consistent with what we are seeing from the pair, which continues to show little movement this week. A majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar breaking out and posting gains against the pound.

GBP/USD is listless on Tuesday. In the European session, the pair has edged lower.

 

GBP/USD Fundamentals

  • 8:30 British Nationwide HPI. Estimate 0.7%. Actual 0.7%.
  • 8:30 British Construction PMI. Estimate 61.2 points. Actual 60.0 points.
  • 14:00 US Factory Orders. Estimate 0.6%.
  • 14:00 US IBD/TIPP Economic Optimism. Estimate 46.5 points.
  • All Day – US Total Vehicle Sales. Estimate 16.0M.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.