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GBP/USD – Pound Slips on Soft Manufacturing Report

GBP/USD is lower in the Wednesday session. In North American trade, the pair is trading at the 1.26 line. On the release front, UK Manufacturing Production posted a sharp decline of 0.9%, well short of the forecast of +0.2%. In the US, JOLTS Job Openings improved to 5.53 million, matching the forecast. On Thursday, the US releases unemployment claims, with the indicator expected to rise to 272 thousand.

Is the British manufacturing sector in trouble? British Manufacturing Production was unexpectedly weak in October, posting a decline of 0.9%. This marked the indicator’s largest decline since February. Industrial Production followed suit with a poor reading, dropping 1.3%. Last week’s Manufacturing PMI also softened, posting a reading of 53.4, which was short of the forecast of 54.4. On the Brexit front, the Supreme Court is holding a hearing on Article 50, the mechanism for Britain’s withdrawal from the European Union. The government has appealed a ruling which says Article 50 cannot be triggered without parliament’s approval. British Prime Minister Theresa May wants to commence Brexit negotiations in March without having to consult parliament. For its part, the European Union has said that if negotiations do start in March, the EU’s target date to reach an agreement is October 2018.

The Federal Reserve will meet next week and the markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and sentiment towards the US dollar remains high. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has said he will increase government spending and cut taxes. This could lead to higher inflation levels, which means the Fed may need to adjust its outlook.

GBP/USD Fundamentals

Wednesday (December 7)

Thursday (December 8)

*All release times are EST

* Key events are in bold

GBP/USD for Wednesday, December 7, 2016

GBP/USD December 7 at 11:20 EST

Open: 1.2670 High: 1.2672 Low: 1.2568 Close: 1.2607

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2272 1.2351 1.2471 1.2620 1.2778 1.2849

Further levels in both directions:

OANDA’s Open Positions Ratio

GBP/USD ratio is showing slight gains in short positions. Currently, long positions have a majority (58%), indicative of trader bias towards GBP/USD reversing directions and moving upwards.

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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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