GBP/USD – Steady as UK Posts Solid Services PMI

GBP/USD continues to trade in a narrow range, and shrugged off another strong British PMI release, as Services PMI beat expectations. The pair is trading quietly in the mid-1.55 range. Turning to economic news, US releases looked good on Thursday, as Trade Balance and Unemployment Claims beat expectations. The markets are keeping a close eye on the US, which will release three key events later today – Non-Farm Payrolls, the Unemployment Rate and ISM Non-Manufacturing PMI.

British PMIs enjoyed a good week, as all three beat their estimates. Manufacturing and Construction PMIs posted solid readings earlier in the week, and Services PMI followed suit on Friday. The indicator climbed from 52.4 to 52.9 points, beating the forecast of 52.5. No less important, it was the fourth consecutive reading above the 50-point level, indicating ongoing  expansion in the UK Services sector.

On Thursday, the ECB pulled the trigger and reduced interest rates to 0.50%, a record low. The rate had been pegged at 0.75% since July 2012. The move was widely expected, as the Eurozone economy remains in poor shape, and many of the major European economies are in recession. However, the euro initially moved higher before dropping sharply. The catalyst for the drop was comments by ECB head Mario Draghi that he was considering a negative deposit rate for banks. The deposit rate, which is what the ECB pays Eurozone banks for overnight deposits, currently stands at 0%. A negative rate could lead to funds flowing out of the Eurozone, and the euro was down more than one cent on Thursday as a result.

The US has been weighed down with poor releases since late March, so Thursday’s solid numbers were welcome news. The US trade deficit narrowed from $43.0 billion to $38.8 billion, easily beating the estimate of $42.1 billion. A well, Unemployment Claims were below expectations for the second straight week. The key indicator dropped from 339 thousand to 324 thousand, blowing past the estimate of 346 thousand. We’ll get a better picture of the US employment situation on Friday, as the US releases Non-Farm Payrolls and the Unemployment Rate.

Meanwhile, the FOMC policy meeting turned out to be a non-event. The FOMC policy statement on Wednesday said little, as the Fed basically noted that it wasn’t willing to take further steps, despite signs of weakness in the US economy. There was no indication that the Fed would make any changes (higher or lower) to its current QE program of purchasing $85 billion in assets each month. The Fed did criticize the government’s economic policy, stating that current fiscal policy was restraining economic growth.  


GBP/USD for Friday, May 3

 Forex Rate Graph 15/1/13

GBP/USD May 3 at 11:50 GMT

GBP/USD 1.5554 H: 1.5572 L: 1.5520  


GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5203 1.5309 1.5432 1.5524 1.5630 1.5695


 GBP/USD is steady in the Friday European session, as it trades in the mid-1.55 range. The pair continues to test the 1.5524 line, and briefly broke through it earlier. We could see this line fall if the pound can sustain any upward momentum. There is stronger resistance at 1.5630. On the downside, 1.5432 is providing support. This is followed by a support level at 1.5309. 

  • Current range: 1.5432 to 1.5524


  Further levels in both directions:

  • Below: 1.5432, 1.5309, 1.5203 and 1.5111
  • Above: 1.5524, 1.5630, 1.5695 and 1.5773


  OANDA’s Open Positions Ratio

Long positions continue to comprise a solid majority of the open positions. This is indicative of a strong bias towards the pound improving. However, we are not seeing this movement from the pair at present, as the pair trades quietly.

After some impressive gains against the dollar, the pound has settled down, and failed to take advantage of a solid UK Services PMI on Friday. With the US releasing key employment data later today, we could see some movement from the pair before the end of the trading week.


GBP/USD Fundamentals

  • 8:30 British Services PMI. Estimate 52.5 points. Actual 52.9 points.
  • 12:30 US Non-Farm Employment Claims. Estimate 146K.
  • 12:30 US Unemployment Rate. Estimate 7.6%.
  • 12:30 US Average Hourly Earnings. Estimate 0.2%.
  • 14:00 US ISM Non-Manufacturing PMI. Estimate 54.1 points.
  • 14:00 US Factory Orders. Estimate -2.8%.
  • 16:30 US Federal Reserve Governor Daniel Tarullo Speaks.


 *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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.