GBP/USD – Pound slide continues as UK manufacturing PMI misses estimate

GBP/USD has started the week with considerable losses. In Monday’s North American session, the pair is trading at 1.2880, down 0.62% on the day. On the release front, British Manufacturing PMI dropped to 52.8, missing the estimate of 53.9 points. There are no U.S events, with markets closed for Labor Day. On Tuesday, the UK releases Construction PMI and BoE Governor Mark Carney will testify before Parliament’s Treasury Committee. In the U.S, the key event is ISM Manufacturing PMI.

The pound has lost ground for a third straight day, as investors reacted negatively to a soft manufacturing PMI in August. The indicator dropped to its lowest level since July 2016, which was right after the Brexit referendum. A drop in exports in August was a key factor in the PMI downturn, which slipped from 54.0 to 52.8 points. With the global economy showing signs of a slowdown and the lack of clarity over Brexit, Britain’s manufacturing sector could run into further headwinds during the next several months.

Investors are keeping a nervous eye on the tariff spat between China and the U.S. So far, the two economic giants have imposed $50 billion in tariffs on each other, and President Trump has threatened further tariffs worth some $200 billion, which could be imposed as early as this week. The U.S could elect to impose the tariffs in smaller bites, such as a $50 billion tariff. With the U.S economy booming, there is little pressure on the Trump administration to shy away from imposing further tariffs. The current trade spat has already seen the U.S dollar gain ground against the pound and further tariffs could boost the U.S dollar.

A jittery start to the month of September

When central banks and the political worlds collide

Barnier and UK manufacturing data weigh on GBP

GBP/USD Fundamentals

Monday (September 3)

  • 4:30 British Manufacturing PMI. Estimate 53.9. Actual 52.8
  • 19:01 BRC Retail Sales Monitor

Tuesday (September 4)

  • 4:30 British Construction PMI. Estimate 54.9
  • 8:15 British Inflation Report Hearings
  • 10:00 US ISM Manufacturing PMI. Estimate 57.6

*All release times are DST

*Key events are in bold

GBP/USD for Monday, September 3, 2018

GBP/USD September 3 at 11:20 DST

Open: 1.2960 High: 1.2960 Low: 1.2855 Close: 1.2880

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2589 1.2706 1.2852 1.2996 1.3088 1.3173

GBP/USD showed little movement in the Asian session. The pair posted small gains in European trade and this trend has continued in the North American session.

  • 1.2852 is providing support
  • 1.2996 has strengthened in resistance following losses by GDP/USD on Monday
  • Current range: 1.2852 to 1.2996

Further levels in both directions:

  • Below: 1.2852, 1.2706, 1.2589 and 1.2366
  • Above: 1.2996, 1.3088 and 1.3173

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.