GBP/USD has gained ground in the Wednesday session. In the North American session, the pair is trading at 1.2905, up 0.38% on the day. On the release front, Services PMI in August improved to 54.3, above the estimate of 53.9 points. In the U.S, the sole event was Trade Balance. The trade deficit continued to widen in July, with a reading of -$50.1 billion. This marked the highest deficit in 5 months. On Thursday, the U.S releases ADP nonfarm payrolls, unemployment claims and the ISM Non-Manufacturing PMI.
The pound is in positive territory on Wednesday, after a rocky start to the week. Investors reacted negatively as the manufacturing and construction PMIs both fell short of expectations. These snapshots of the health of the UK economy indicated that the lack of direction over Brexit has had a negative impact on the manufacturing and construction sectors. The pound posted gains earlier in the Wednesday session, following a report that German officials might be willing to sign an agreement with the UK even if not all issues were completely resolved. This buoyed investor confidence, while at the same time underscoring that the pound’s movement is very dependent on the extent of progress in the negotiations between the EU and the UK.
Emerging markets continue to struggle, as nations such as Argentina and Indonesia are experiencing major declines in their currencies against the U.S dollar. This has triggered heavy losses in emerging equity markets, and fears that this could hamper global growth are weighing on European and North American markets as well. If the sell-off in the emerging markets continue to spiral downwards, the U.S dollar could gain more ground.
Wednesday (September 5)
- 4:30 British Services PMI. Estimate 54.3. Actual 54.9
- 8:30 US Trade Balance. Estimate -50.2B. Actual –50.1B
*All release times are DST
*Key events are in bold
GBP/USD for Wednesday, September 5, 2018
GBP/USD September 5 at 12:00 DST
Open: 1.2856 High: 1.2984 Low: 1.2786 Close: 1.2904
GBP/USD was flat in the Asian session and edged lower in European trade. In the North American session, the pair has climbed sharply but has given up some of these gains
- 1.2852 is providing support
- 1.2966 is the next resistance line
- Current range: 1.2852 to 1.2966
Further levels in both directions:
- Below: 1.2706, 1.2589 and 1.2366
- Above: 1.2852, 1.2996, 1.3088 and 1.3173
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