GBP/USD has been fairly quiet in Tuesday trading. In the North American session, the pair is trading in the mid-1.55 range. Both the US and UK posted strong numbers earlier in the day. In the UK, Construction PMI rose and hit a six-year high. Over in the US, ISM Manufacturing PMI continued to look sharp and posted its highest level since May 2012.
Another British PMI release, another excellent performance. This has been the recent trend and this week’s PMIs have been no exception. The week got off to a superb start with the release of Manufacturing PMI on Monday. The index jumped from 54.6 points in July to 57.2 points in August. This easily beat the estimate of 55.2 points. This was the index’s highest level since 1994. Construction PMI kept pace, climbing from 57.0 points in August to 59.1 points, in the September reading. This easily beat the estimate of 58.4 points, and was the index’s best showing since May 2012. Will Services PMI follow pace on Wednesday with a solid performance?
The markets displayed some volatility last week in anticipation of an expected US military strike against Syria, after a chemical attack in the war-torn country killed hundreds However, the attempt by the US to secure a coalition ran into trouble, and President Obama said on the weekend that he will seek Congressional approval before taking any action against Syria. With Congress in recess until September 9th, a military strike could be delayed until mid-September or even later. Meanwhile, the markets have now settled down as the threat of military action has receded for the time being.
When will the Federal Reserve taper QE? The Federal Reserve has not given any hints, and recent statements from Fed policymakers underscore divisions regarding the timing of such a move. What is clear is that stronger US numbers will increase the likelihood of the Fed acting sooner rather than later. This means that US releases, especially employment data, will be under the market microscope and traders should be prepared for the Fed to begin tapering at any time, which will likely bolster the US dollar.
GBP/USD for Tuesday, September 3, 2013
GBP/USD September 3 at 15:35 GMT
GBP/USD 1.5546 H: 1.5593 L: 1.5506
- GBP/USD is not showing much movement in Tuesday trading. The pair crossed above the 1.56 line early in the European session but was unable to consolidate these gains and retracted.
- The pair continues to face resistance at 1.5645. This is followed by a resistance line at 1.5756. This line has remained intact since February.
- On the downside, the GBP/USD is receiving support at 1.5527. This is a weak line and could be tested if the dollar shows any strength. This is followed by stronger support at 1.5432.
- Current range: 1.5527 to 1.5645
Further levels in both directions:
- Below: 1.5527, 1.5432, 1.5309, 1.5203 and 1.5127.
- Above: 1.5645, 1.5756, 1.5877 and 1.6000
OANDA’s Open Positions Ratio
The GBP/USD ratio is showing little movement in Tuesday trading. This is reflected in the current movement of the pair, as the pair trades quietly. The ratio continues to have a solid majority of short positions, which reflects a strong bias in favor of the US dollar posting gains against the pound.
With both the US and UK posting solid key releases on Tuesday, GBP/USD has not shown much movement. We can expect the pair to continue to tread softly and trade quietly during the North American session.
- 8:30 British Construction PMI. Estimate 58.4 points. Actual 59.1 points.
- 23:01 British Shop Price Index.
- 13:00 US Final Manufacturing PMI. Estimate 53.9 points. Actual 53.1 points.
- 14:00 US ISM Manufacturing PMI. Estimate 54.2 points. Actual 55.7 points.
- 14:00 US Construction Spending. Estimate 0.3%. Actual 0.6%.
- 14:00 US ISM Manufacturing Prices. Estimate 51.6 points. Actual 54.0 points.
*Key releases are highlighted in bold
*All release times are GMT
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