GBP/USD has edged higher in Tuesday trading. In the North American session, the pair is trading at 1.2920. On the release front, British Manufacturing PMI improved to 57.3, well above the forecast of 54.0 points. There are no major US events on the schedule. On Wednesday, the UK will release Construction PMI. Over in the US, the Federal Reserve will release its policy statement. The other key releases are ADP Nonfarm Payrolls and ISM Non-Manufacturing PMI.
UK Manufacturing PMI climbed to its highest level since 2014, yet another sign that the British economy has weathered the Brexit storm better than expected. At the same time, market concerns are again rising ahead of the start of negotiations between Britain and the European Union. The EU has toughened its stance in recent weeks, and on Monday, the German media reported that a meeting last week between May and Jean Claude Juncker, president of the EU, had gone very badly. Although 10 Downing Street claims the talks were ‘constructive’, the EU attacked May on Monday, bluntly stating that it was “more likely than not” that the Brexit talks would fail in light of the May-Juncker fiasco. If the two sides remain at loggerheads, market jitters could send the pound downwards.
The US economy appears to have hit some turbulence, as underscored by a disappointing Advance GDP for the first quarter. The economy expanded at just 0.7%, well below the forecast of 1.3%. Consumer indicators have also been softer than expected. On Friday, Revised UoM Consumer Sentiment came in at 97.0, short of the estimate of 98.1 points. This echoed the CB Consumer Confidence report earlier in the week, which also missed expectations. Consumer spending is also raising concerns, and Personal Spending dipped to 0.0% in March, the first time the indicator hasn’t posted a gain since July 2016. Key employment data, highlighted by Nonfarm Payrolls, will be released on Friday. If these indicators miss expectations, the US dollar could suffer broad losses.
It’s been a rocky start for President Donald Trump, who just marked the 100-day milestone of his term in office. Trump’s popularity is at record lows for a new president, but he managed to avoid the embarrassment of a government shutdown, as lawmakers reached an agreement on the weekend. The short-term spending deal, which has bipartisan support, provides funding for government services until September 30th. The deal does not include any funding for a border wall with Mexico, marking a clear concession on the part of Trump. The White House is hoping that this small victory will be the prelude to more cooperation between the Republicans and Democrats on Capitol Hill, as Trump will need some support from the Democrats in order to pass tax reform legislation, one of Trump’s major campaign planks.
Tuesday (May 2)
- 4:30 British Manufacturing PMI. Estimate 54.0. Actual 57.3
- All Day – US Total Vehicle Sales. Estimate 17.1M
Wednesday (May 3)
- 4:30 British Construction PMI. Estimate 52.1
- 8:15 US ADP Nonfarm Employment Change. Estimate 178K
- 10:00 US ISM Non-Manufacturing PMI. Estimate 56.1
- 14:00 US FOMC Statement
- 14:00 US Federal Funds Rate. <1.00%
*All release times are GMT
*Key events are in bold
GBP/USD for Tuesday, May 2, 2017
GBP/USD May 2 at 8:00 EST
Open: 1.2896 High: 1.2923 Low: 1.2863 Close: 1.2923
- GBP/USD was flat in the Asian session. In European trade, the pair posted losses but recovered. The pair has been steady in North American trade
- 1.2865 is providing support
- 1.2946 is a weak resistance line
Further levels in both directions:
- Below: 1.2865, 1.2706, 1.2571 and 1.2471
- Above: 1.2946, 1.3058 and 1.3121
- Current range: 1.2865 to 1.2946
OANDA’s Open Positions Ratio
GBP/USD ratio is unchanged this week. Currently, short positions have a majority (60%). This is indicative of trader bias towards GBP/USD reversing directions and moving lower.
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.