GBP/USD – Pound gains ground as Services PMI beats expectations

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.

 

GBP/USD Fundamentals

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 Technical

S1 S2 S1 R1 R2 R3
1.2589 1.2706 1.2852 1.2966 1.3088 1.3173

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

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.