GBP/USD: Pound Under Pressure in Subdued Trade

GBP/USD has posted modest losses on Monday, as the pair trades in the low-1.71 range in the North American session. There are no releases out of the US or UK, so traders can expect light trading during the day.

British PMIs are important barometers of the health of key sectors in the UK economy, and last week’s releases were strong, which was good news for the high-flying British pound. British Services PMI did soften in May, dipping to 57.7 points, but this was within expectations. The Manufacturing and Construction PMIs pushed higher, last month, pointing to increased expansion in the manufacturing and construction sectors. Construction PMI rose to 62.6 points and has remained above the 60-point level throughout 2014, as the construction sector, buoyed by the red-hot housing market, continues to expand. British key numbers have generally been positive, and the pound has taken full advantage as the British recovery deepens. The pound enjoyed a superb June, gaining about 350 points against the dollar.

In the US, employment data sparkled last week. Nonfarm Payrolls led the way, as the key indicator bounced back in June with a strong release, coming in at 288 thousand new jobs. This crushed the estimate of 214 thousand. Unemployment Claims was steady at 315 thousand, almost replicating the estimate of 314 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be under the market microscope.

GBP/USD for Monday, July 7, 2014

GBP/USD July 7 at 15:30 GMT

GBP/USD 1.7131 H: 1.7156 L: 1.7108

GBP/USD Technical

• GBP/USD posted slight losses in the Asian and European sessions, touching a low of 1.7108. The pair has reversed directions in North American trading, recovering some of the earlier losses.
• 1.7000 continues to provide strong support.
• 1.7183 remains an immediate resistance line. This is followed by 1.7228, which has held firm since October 2008.
• Current range: 1.7000 to 1.7183.

Further levels in both directions:

• Below: 1.7000, 1.6920, 1.6825 and 1.6700
• Above: 1.7183, 1.7228, 1.7383 and 1.7482

OANDA’s Open Positions Ratio

GBP/USD is pointing to gains in Monday trade. This is not consistent with the movement of the pair, as the pound has posted slight losses. A substantial majority of open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar continuing to move higher.

GBP/USD Fundamentals

• There are no British or US releases on Monday.

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.