GBP/USD – Little Movement as UK & US Post Solid Mfg. PMIs

GBP/USD is showing little movement on Monday, as the pair trades continues to trade in the mid-1.63 range. The pound failed to take advantage as British Manufacturing PMI climbed to its highest level since February 2011. It was a similar story in the US, as the Manufacturing PMI moved higher.

US releases got off to a fast start as ISM Manufacturing PMI jumped to 57.3 points, up from 56.4 the month before. This beat the estimate of 55.2 and was the index’s best showing since April 2011. The markets will be keeping close tabs on this week’s US employment releases, as the Fed is likely to step in and taper QE if employment numbers continue to improve. Unemployment Claims have looked sharp for the past two releases, and if the Non-Farm Payrolls and Unemployment Rate look solid, this week, the US dollar could gain ground.

Many UK economic indicators have been posting strong gains, but there were some weak consumer releases on Friday. GfK Consumer Confidence continues to look weak, coming in at -12 points, short of the estimate of -8 points. Net Lending to Individuals, an important gauge of consumer borrowing and spending, dropped to 1.7 billion pounds, missing the estimate of 2.1 billion. These weak readings indicate that consumer confidence and spending remain weak, despite the improvement in the British economy. Other consumer indicators, notably Retail Sales, are pointing to weak consumer spending, which is an important catalyst of economic activity.

On Thursday, there was an upbeat Financial Stability report from the Bank of England. The Bank stated that risks to financial stability had lessened as economic growth appears to be improving. At the same time, the BOE warned that a sharp rise in interest rates could threaten financial stability. This message is similar to what we heard from Governor Mark Carney when he testified before a parliamentary committee earlier this week. Carney sought to dampen growing expectations of an interest hike, saying that economy still has plenty of slack and that the BOE might hold off on a rate hike even if unemployment fell below the 7% level.

GBP/USD for Monday, December 2, 2013

GBP/USD December 2 at 16:30 GMT

GBP/USD 1.6367 H: 1.6442 L: 1.6343

GBP/USD Technical

• GBP/USD is steady in Monday trading. The pair touched a high of 1.6442 during the Asian session but was unable to consolidate these gains and dropped back below the 1.64 line.
• 1.6300 continues to provide support. This is not a strong line and could face pressure if the pound gives up some gains. This is followed by support at 1.6231.
• On the upside, the pair faces resistance at 1.6476. This is followed by resistance at the round number of 1.6600, which has remained intact since August 2011.
• Current range: 1.6300 to 1.6476

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in Monday trading, continuing the trend we saw on Friday. This is reflected in the pair’s current movement, as the pound has not been able to sustain any upward momentum. Short positions continue to dominate the ratio, reflecting a trader bias towards the US dollar posting gains against the pound.

The pair is having a quiet day, and did not react to strong PMIs out of the UK and US. So we could see an uneventful North American session for GBP/USD.

GBP/USD Fundamentals

• 9:30 British Manufacturing PMI. Estimate 56.5 points. Actual 58.4 points.
• 13:30 Fed Chairman Bernard Bernanke Speaks.
• 14:00 US Final Manufacturing PMI. Estimate 54.3 points. Actual 54.7 points.
• Sep. Data – US Construction Spending. Estimate 0.5%. Actual -0.3%.
• 15:00 US ISM Manufacturing PMI. Estimate 55.2 points. Actual 57.3 points.
• 15:00 US Construction Spending. Estimate 0.4%. Actual 0.8%.
• 15:00 US ISM Manufacturing Prices. Estimate  55.0 points. Actual 52.5 points.

*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.