GBP/USD – British pound edges higher as Services PMI Climbs

The British pound has posted slight gains in the Wednesday session. In the North American session, the pair is trading at 1.3212, up 0.13% on the day. On the release front, British Services PMIs improved to 55.1, beating the estimate of 54.0 points. There are no U.S events, with banks and stock markets closed for the Fourth of July holiday. On Thursday, BoE Governor Mark Carney will speak at an event in Newscastle. The U.S will releases ADP nonfarm payrolls, unemployment claims and the FOMC minutes of the June policy meeting.

It was a 3-for-3 sweep for British PMIs, as all three indicators beat their estimates. Earlier in the week, Manufacturing and Construction PMIs improved in June, with readings of 54.4 and 53.1, respectively. On Wednesday, Services PMI climbed to 55.1, beating the estimate of 54.0. The indicator has now improved for a third straight month. The PMIs are bellwethers of the British economy, and these releases point to sustained expansion across key sectors. At the same time, the lack of progress in the Brexit negotiations is a major source of concern and continues to weigh on British pound.

The spotlight will be on the Federal Reserve on Thursday, with the release of the FOMC minutes. The minutes could be a market-mover, as investors look for clues about upcoming rate hikes. The June hike marked the second in 2018, and whether the Fed will press the trigger three or four times this year remains a hot topic, as Fed policymakers appear split on the issue. The impressive performance of the U.S economy makes a strong case for four hikes, but the Fed is uneasy about escalating trade tensions as a result of President Trump slapping tariffs on major U.S trading partners.

  The Yuan airbrake

GBP/USD Fundamentals

Wednesday (July 4)

  • 4:30 British Services PMI. Estimate 54.0. Actual 55.1

Thursday (July 5)

  • 6:00 BoE Governor Mark Carney Speaks
  • 8:15 US ADP Nonfarm Employment Change. Estimate 190K
  • 8:30 US Unemployment Claims. Estimate 231K
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 58.3
  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, July 4, 2018

GBP/USD July 4 at 11:10 DST

Open: 1.3195 High: 1.3227 Low: 1.3171 Close: 1.3213

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2996 1.3088 1.3186 1.3263 1.3494 1.3613

GBP/USD ticked higher in the Asian session. The pair showed some movement in European trade and is flat in the North American session

  • 1.3186 was tested earlier in support
  • 1.3263 is the next resistance line
  • Current range: 1.3186 to 1.3263

Further levels in both directions:

  • Below:  1.3186, 1.3088, 1.2996 and 1.2908
  • Above: 1.3263, 1.3494 and 1.3613

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.