GBP/USD – Pound Shrugs off Weak Construction PMI

GBP/USD is showing limited movement on Tuesday, continuing the trend which has marked the pair since late last week. The pair is trading just below the 1.6000 line in North American trade. On the release front, British Construction PMI softened in September, slipping to 61.4 points. In the US, the trade deficit widened to $43.0 billion, its highest in four months.

British Construction PMI disappointed, slipping to 61.4 points, compared to 63.5 points in the previous release. The estimate stood at 63.5 points. The October reading still points to strong expansion in the construction sector, as the 50 level separates between expansion and contraction. On Monday, there was better news as Manufacturing PMI improved to 53.2 points, easily beating the estimate of 51.5 points. This week’s PMI parade concludes on Wednesday, with the release of Services PMI.

It was another solid performance from US GDP on Thursday, which posted a strong gain of 3.5% in Q3, ahead of the estimate of 3.1%. Although this was short of the Q2 reading of 4.0%, the two readings mark the strongest six-month gain we’ve seen in ten years. Unemployment Claims increased slightly to 287 thousand, slightly higher than the previous reading of 284 thousand. However, the four-week average remains at multi-year lows, pointing to an improving labor market. There was more positive news on Friday, as UoM Consumer Sentiment improved to 86.9 points, its strongest showing since July 2007.

GBP/USD for Tuesday, November 4, 2014

GBP/USD November 4 at 16:50 GMT

GBP/USD 1.5996 H: 1.6016 L: 1.5965

GBP/USD Technical

• GBP/USD showed slight gains in the Asian session. The pair has been stable in the European and North American sessions as resistance at the round number of 1.6000 is under strong pressure.
• 15864 continues to provide strong support.
• On the upside, the round number of 1.6000 was tested earlier and is fluid. Will the pair break above this weak line? 1.6141 is stronger.
• Current range: 1.5864 to 1.6000

Further levels in both directions:

• Below: 1.5864, 1.5717, 1.5644 and 1.5505
• Above: 1.6000, 1.6141, 1.6263, 1.6382 and 1.6524

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Tuesday. This is consistent with GBP/USD, which has posted gains. The ratio is almost evenly split, indicative of a lack of trader bias as to what to expect from GBP/USD.

GBP/USD Fundamentals

• 9:30 British Construction PMI. Estimate 61.4 points. Actual 63.5 points.
• 13:30 US Trade Balance. Estimate -40.0B. Actual -43.0B.
• 15:00 US Factory Orders. Estimate -0.4%. Actual -0.6%.
• 15:00 US IBD/TIPP Economic Optimism. Estimate 46.6 points. Actual 46.4 points.
• All Day – US Congressional Elections.

* Key releases are in highlighted bold

*All release times are GMT

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