GBP/USD – Improving Pound Shrugs Off Weak Manfacturing Data

GBP/USD has moved upwards on Tuesday, continuing the trend which started a day earlier. In the North American session, the pair is trading just below the 1.57 line. On the release front, UK Manufacturing Production disappointed with a decline of 0.7%. There was better news from NIESR GDP Estimate, which held steady at 0.7%. In the US, there was more good news on the US employment front, as JOLTS Job Openings improved to 4.83 million in October.

In the UK, Manufacturing Production surprised with a decline of 0.7% in October, well short of the forecast of 0.2%. This was the key indicator’s worst showing since May. The manufacturing sector continues to point downwards, hampered by weak demand from a depressed Eurozone economy. Meanwhile, NIESR GDP Estimate, which helps track GDP, remained steady at 0.7% for a third straight month.

US employment data looked superb last week, and the good news continued on Tuesday, as JOLTS Job Openings climbed to 4.83 million, up from 4.74 million a month earlier. This beat the estimate of 4.81 million. On Friday, Nonfarm Payrolls shot up to 321 thousand in November, stunning the markets which had expected a rise of 231 thousand. There was also a rise in wages, which should translate into stronger inflation numbers. The unemployment rate held steady at 5.8%, matching the forecast. The excellent Nonfarm Payrolls should help allay concerns about whether the economy can weather an expected rate increase in 2015.

GBP/USD for Tuesday, December 9, 2014

GBP/USD December 9 at 16:45 GMT

GBP/USD 1.5692 H: 1.5716 L: 1.5627

GBP/USD Technical

• GBP/USD has been marked by choppy trading. The pair tested support at 1.5644 in the Asian and European sessions. The dollar is under pressure in North American trade, as the pair pushes towards resistance at 1.5717.
•  1.5717 is a weak resistance line. Will the pair break above this level in the North American session? 1.5864 is stronger.
• 1.5644 was tested earlier and is providing weak support. 1.5505 is next.
• Current range: 1.5644 to 1.5717

Further levels in both directions:

• Below: 1.5644, 1.5505, 1.5392, 1.5282 and 1.5165
• Above: 1.5717, 1.5864, 1.6000 and 1.6141

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions on Tuesday. This is not consistent with the movement of the pair, as the pound has posted gains. The ratio is split between long and short positions, indicative of a lack of trader bias as to what direction the pound will take next.

GBP/USD Fundamentals

• 9:30 British Manufacturing Production. Estimate +0.2%. Actual -0.7%.
• 9:30 British Industrial Production. Estimate +0.3%. Actual -0.1%.
• 10:34 British 30-year Bond Auction. Estimate 2.70%.
• 12:30 US NFIB Small Business Index. Estimate 96.6 points. Actual 98.1 points.
• 15:00 British NIESR GDP Estimate. Actual 0.7%.
• 12:30 US NFIB Small Business Index. Estimate 96.6 points. Actual 98.1 points.
• 15:00 US JOLTS Job Openings. Estimate 4.81M. Actual 4.83M.
• 15:00 US IBD/TIPP Economic Optimism. Estimate 47.2 points. Actual 48.4 points.
• 15:00 US Wholesale Inventories. Estimate 0.1%. Actual 0.4%.

*Key releases are highlighted in bold

*All release times are GMT

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