GBP/USD – Pound Jumps as UK Manufacturing Shows Slight Growth

GBP/USD has posted gains on Monday, as the pair trades in the low-1.57 range in the North American session. On the release front, British Manufacturing PMI edged up to 53.5 points, beating the estimate of 53.1 points. In the US, ISM Manufacturing PMI came in at 58.7 points, showing little change from the previous release.

In the US, ISM Manufacturing PMI dropped to 58.7 points, close to the previous release of 59.0 points. This easily beat the estimate of 57.9 points. Last week, US numbers were largely disappointing, as unemployment claims, housing and consumer confidence numbers missed their estimates. Despite the weak data, the US dollar held its own against the pound.

Last week, British GDP posted a respectable gain of 0.7% in Q3, matching the forecast. However, this was shy of the 0.9% gain recorded in Q2. The weaker reading reflects softer data across the UK economy in the third quarter. Earlier in the week, BoE Governor Mark Carney testified before Parliament’s Treasury Committee on Tuesday, and his remarks echoed the dovish Inflation Report which was released earlier in the month. Carney said that inflation levels will likely fall below 1% in the next several months, but should then move back towards the BoE target of 2%. Carney noted that the British economy is under pressure from weak economic conditions in Japan and the Eurozone. The markets have tempered their expectations of a rate hike as the BoE has lowered its forecasts for growth and inflation.

GBP/USD for Monday, December 1, 2014

GBP/USD December 1st at 16:00 GMT

GBP/USD 1.5721 H: 1.5762 L: 1.5586

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5505 1.5644 1.5717 1.5864 1.6000 1.6141

 

  • GBP/USD was uneventful in the Asian session, but posted strong gains in European trade. The pound has edged lower in the North American session.
  • 1.5864 is a strong resistance line.
  • 1.5717 is fluid and could see further action during the North American session. 1.5644 is stronger.
  • Current range: 1.5717 to 1.5864

Further levels in both directions:

  • Below: 1.5717, 1.5644, 1.5505, 1.5392 and 1.5282
  • Above: 1.5864, 1.6000, 1.6141 and 1.6263

 

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged on Monday. This is not consistent with the movement of the pair, as the pound has posted strong gains. The ratio has a majority of long positions, indicative of trader bias towards the pound continuing to move higher.

GBP/USD Fundamentals

  • 9:30 British Manufacturing PMI. Estimate 53.1 points. Actual 53.5 points.
  • 9:30 British Net Lending to Individuals. Estimate 2.8B. Actual 2.6B.
  • 9:30 British M4 Money Supply. Estimate +0.2%.. Actual -0.1%.
  • 9:30 British Mortgage Approvals. Estimate 59K. Actual 59K.
  • 15:00 US ISM Manufacturing PMI. Estimate 57.9 points. Actual 58.7 points.
  • 15:00 US Manufacturing Prices. Estimate 52.6 points. Actual 44.5 points.
  • 17:15 US FOMC Member William Dudley Speaks.
  • 18:00 US FOMC Member Stanley Fischer 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

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.