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GBP/USD – Pound Can’t Make Up Its Mind After Soft UK Manufacturing PMI

GBP/USD has moved strongly in both directions on Wednesday, but is almost unchanged as the pair trades at the 1.62 line in the North American session. On the release front, British Manufacturing slipped to 51.6 points last month, short of expectations. Over in the US, ADP Nonfarm Payrolls rose 213 thousand, which was above expectations. However, ISM Manufacturing PMI dropped to 51.6 points.

The pound shrugged off a weak Manufacturing PMI on Wednesday. The index dropped to 56.6 points, down from the previous reading of 52.5 points. This was the PMI’s lowest level since May 2013 and marked a third straight decline. The markets are bound to be concerned about the health of the manufacturing sector after the disappointing reading and will be closely monitoring upcoming manufacturing data. There was much better news from Final GDP earlier in the week. The quarterly indicator posted a sharp gain of 0.9% in Q2, its best showing since Q3 of 2012.

In the US, ADP Nonfarm Payrolls surprised with a strong gain, climbing to 213 thousand, compared to 204 thousand in the previous release. This beat the estimate of 207 thousand. The ADP release precedes the official NFP release, which will be published on Friday. The markets are anticipating a sharp gain, with an estimate of 216 thousand. If the indicator does follow suit with a solid reading, the US dollar could post further gains against its major rivals. The news was not as cheery on the manufacturing front, as ISM Manufacturing PMI fell to 56.6 points, down from 59.0 points a month earlier.

Earlier in the week, US Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. The important housing indicator has shown strong movement, resulting in readings that have been well off market estimates. US housing indicators continue to paint a mixed picture, as New Home Sales jumped last month, while Existing Home Sales softened and was well short of expectations.

GBP/USD for Wednesday, October 1, 2014

GBP/USD October 1 at 15:40 GMT

GBP/USD 1.6205 H: 1.6252 L: 1.6162

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5864 1.6000 1.6141 1.6263 1.6382 1.6484

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged on Wednesday. This is consistent with the pair’s movement, as the pound has shown little net movement despite some volatility. The pair is almost evenly split between long and short positions, indicative of a lack of trader bias as to what direction we can next expect the pair to take.

 

GBP/USD Fundamentals

* 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 [4]

Currency Analyst at Market Pulse [5]
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.