GBP/USD – Pound Slide Continues Despite Strong British Services PMI

The British pound continues to point southwards on Wednesday, as GBP/USD trades in the mid-1.64 range in the North American session. The shaky pound has shed over 150 points since Monday and is at its lowest levels against the US dollar since February. On the release front, UK Services PMI climbed to 60.5 points, marking a 10-month high. In the US, there are no major events on the calendar. Factory Orders jumped 10.5% last month, slightly below expectations.

UK Services PMI rose to 60.5 points, the first time the index has been above the 60-point level since October. This reading was well above the estimate of 58.6 points. Earlier in the week, Construction PMI hit a seven-month high at 64.0 points, while Manufacturing PMI dipped to 52.5, pointing to slight expansion. The PMI data points to an unbalanced economic recovery in the UK, as services and construction point to strong domestic demand, while manufacturing and exports lag behind. Exports have softened due to the weak Eurozone economy and the continuing crisis in Ukraine, which has resulted in sanctions being imposed between Russia and its Western trading partners.

US numbers continue to impress the markets. On Tuesday, ISM Manufacturing PMI impressed the markets, climbing to 59.0 points, its best showing since April 2011. The index easily beat the estimate of 57.0 points. The strong showing follows an unexpectedly strong GDP, which hit 4.2%. With the US economy moving forward at a fast clip, the US dollar has taken full advantage and has made broad gains this week against its major rivals. US Employment data will be in the spotlight for the remainder of the week, with the release of ADP Nonfarm Payrolls on Thursday, followed by the official Nonfarm Payrolls and the unemployment rate on Friday.

 

GBP/USD for Wednesday, September 3, 2014

GBP/USD September 3 at 16:50 GMT

GBP/USD 1.6448 H: 1.6498 L: 1.6440

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6263 1.6382 1.6484 1.6565 1.6700 1.6825

 

  • GBP/USD hit a high of 1.6498 in the European session, but was unable to consolidate at this level and has retracted.
  • 1.6484 is an immediate support line. 1.6382 is stronger.
  • 1.6565 is a strong resistance line.
  • Current range: 1.6484 to 1.6565.

Further levels in both directions:

  • Below: 1.6484, 1.6382, 1.6263 and 1.6141
  • Above: 1.6565, 1.6700, 1.6825 and 1.6920

 

OANDA’s Open Positions Ratio

GBP/USD ratio has a large majority of long positions, indicative of trader bias towards the pound reversing its downward slide.

 

GBP/USD Fundamentals

  • 8:30 British Services PMI. Estimate 58.6 points. Actual 60.5 points.
  • 14:00 US Factory Orders. Estimate 10.9%. Actual 10.9%.
  • All Day – US Day Total Vehicle Sales. Estimate 16.5M.
  • 18:00 US Beige Book.

* 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.