The British pound continues to point downwards on Thursday, as GBP/USD trades just below the 1.64 line in the North American session. The pound has lost about 200 points this week and is at its lowest level against the dollar since February. On the release front, the BOE maintained QE and interest rate levels, as expected. In the US, employment data was soft, as ADP Nonfarm Payrolls and Unemployment Claims both missed expectations. Trade Balance beat the estimate, while ISM Non-Manufacturing PMI improved in August, but missed expectations.
US employment numbers were a disappointment on Thursday. ADP Nonfarm Payrolls slipped to 204 thousand last month, marking a 3-month low. This was well off the estimate of 218 thousand. Unemployment Claims edged higher to 302 thousand, above the estimate of 298 thousand. Will the official Nonfarm Payrolls follow suit with a weak reading? Last month’s release missed expectations, and if the key indicator repeats with another weak reading, GBP/USD could reverse directions and move upwards.
There were no surprises from the BoE, which maintained interest rate levels at 0.50%. With two MPC members voting in favor of raising rates last month, the markets will be keenly interested in seeing the breakdown of Thursday’s vote, which will be released in two weeks time. The central bank also kept QE steady at 375 billion pounds.
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.
GBP/USD for Thursday, September 4, 2014
GBP/USD September 4 at 15:15 GMT
GBP/USD 1.6396 H: 1.6466 L: 1.6388
- GBP/USD was uneventful in the Asian session. The pair has pushed lower in the European and North American sessions.
- 1.6382 is an immediate support line. Will the pair break below this barrier? 1.6263 is stronger.
- 1.6484 has reverted to a resistance role as the pound continues to lose ground.
- Current range: 1.6382 to 1.6484.
Further levels in both directions:
- Below: 1.6382, 1.6263 and 1.6141
- Above: 1.6484, 1.6565, 1.6700 and 1.6825
OANDA’s Open Positions Ratio
GBP/USD ratio is pointing to gains in short positions. This is consistent with the pair’s movement, as the pound continues to lose ground. The ratio has a large majority of long positions, indicative of trader bias towards the pound reversing its downward slide.
- 11:00 BoE Asset Purchase Facility. Estimate 375B. Actual 375B.
- 11:00 BoE Official Bank Rate. Estimate 0.50%. Actual 0.50%.
- 11:30 US Challenger Job Cuts. Actual -20.7%.
- 12:15 US ADP Non-Farm Employment Change. Estimate 218K. Actual 204K.
- 12:30 US Trade Balance. Estimate -42.5B. Actual -40.5B.
- 12:30 US Unemployment Claims. Estimate 298K. Actual 302K.
- 12:30 US Revised Nonfarm Productivity. Estimate 2.5%. Actual 2.3%.
- 12:30 US Revised Unit Labor Costs. Estimate 0.6%. Actual -0.1%.
- 13:45 US Final Services PMI. Estimate 58.5 points. Actual 59.5 points.
- 14:00 US ISM Nonfarm Manufacturing PMI. Estimate 57.3 points. Actual 59.6 points.
- 14:30 US Natural Gas Storage. Estimate 72B. Actual 79B.
- 15:00 US Crude Oil Inventories. Estimate -0.9M. Actual -0.9M.
- 16:30 US FOMC Member Loretta Mester Speaks.
- 23:00 US FOMC Member Jerome Powell Speaks.
* Key releases are highlighted in bold
*All release times are GMT