GBP/USD – Pound Slide Continues

The British pound has started off the week with slight losses, continuing to point downwards after Friday’s big losses. In Monday’s North American session, GBP/USD is trading in the mid-1.52 range. The pound is now trading at its lowest levels against the dollar since August 2013. On the release front, British Construction PMI softened in December, dropping to 57.6 points. In the US, there is one minor release on the schedule, Total Vehicle Sales. As well, FOMC Member John Williams will speak at an event in Boston.

British PMIs continue to point to weakness in the UK economy. On Monday, it was the turn of Construction PMI, which slipped to 57.6 points. This was well short of the estimate of 59.2 and marked the index’s worst performance since July 2013. On Wednesday, we’ll get a look at Services PMI, which is expected to post a strong reading for December.

On Friday, British Manufacturing PMI dipped to 52.5 points, a 3-month low. The index was short of the estimate of 53.7 points. The pound reacted sharply, losing some 260 points on the day. In the US, manufacturing numbers were also weak. The ISM Manufacturing PMI disappointed, falling to 55.5 points. This missed the forecast of 57.6 points and marked a 6-month low for the index.

GBP/USD for Monday, January 5, 2015

GBP/USD January 5 at 16:35 GMT

GBP/USD 1.5243 H: 1.5320 L: 1.5203

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.4873 1.5008 1.5165 1.5282 1.5392 1.5505

 

  • GBP/USD was uneventful in the Asian session. The pair has posted losses in European trade, breaking below support at 1.5282. GBP/USD is unchanged in the North American session.
  • 1.5165 is providing strong support.
  • 1.5282 is a weak resistance line. 1.5392 is stronger.
  • Current range: 1.5165 to 1.5282

Further levels in both directions:

  • Below: 1.5165, 1.5008, 14873 and 1.4781
  • Above: 1.5282, 1.5392, 1.5505, 1.5644 and 1,5717

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as the pound has posted losses. The ratio has a majority of long positions, indicative of trader bias towards the pound reversing its current slide and moving upwards.

GBP/USD Fundamentals

  • 9:30 British Construction PMI. Estimate 59.2 points. Actual 57.6 points.
  • 13:00 US FOMC Member John Williams Speaks.
  • All Day – US Total Vehicle Sales. Estimate 16.9M.

*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.