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.
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 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
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