GBP/USD – British pound dips below 1.30 as Construction PMI slips

GBP/USD has posted considerable losses on Tuesday. In the North American session, the pair is trading at 1.2992, down 0.37% on the day. On the release front, British Construction PMI dipped to 52.1, short of the estimate of 52.8 points. There are no major U.S events. On Wednesday, the UK releases Services PMI, and the U.S publishes two key events – ADP nonfarm payrolls and ISM Non-Manufacturing PMI.

British PMIs, which are highly regarded gauges of economic activity, have been mixed this week. Manufacturing PMI improved to 53.8, above the estimate of 52.6 points. However, Construction PMI fell from 52.9 to 52.1, missing the estimate of 52.8 points. The construction release was the weakest in six months, and the survey found that some construction firms were concerned that soft economic conditions were having a negative impact on their growth. Brexit remains a constant worry in the business sector, as the uncertainty as to whether a deal will be reached between the UK and the European Union continues to dampen sentiment over the British economy.

In the U.S, Friday’s consumer data reflected strong confidence in the U.S economy. Consumer spending rose 0.3% in August, matching the forecast. The UoM Consumer Sentiment report pushed above the 100-level for the first time since March, although the reading of 100.1 missed the estimate of 100.5 points. On the inflation front, the Core PCE Price Index, which is the Federal Reserve’s preferred inflation indicator, dipped to 0.0% in August, shy of the estimate of 0.1%. This was the first time the indicator failed to post a gain since March 2017. Still, inflation remains close to the Fed’s target of 2%, so a December rate hike remains likely.

Oil has sprung another gusher

Risk sentiment is shifting and headline-driven

GBP/USD Fundamentals

Tuesday (October 2)

  • 1:57 British Nationwide HPI.  Estimate 0.2%. Actual 0.3%
  • 4:30 British Construction PMI. Estimate 52.8. Actual 52.1
  • 10:00 US FOMC Member Randal Quarle Speaks
  • All Day – US Total Vehicles. Actual 16.8M
  • 12:45 US Fed Chair Powell Speaks
  • 19:01 British BRC Shop Price Index

Wednesday (October 3)

  • 4:30 British Services PMI. Estimate 54.0
  • 8:15 ADP Nonfarm Employment Change. Estimate 187K
  • 10:00 US ISM Nonfarm Manufacturing PMI. Estimate 58.1
  • 16:00 US Fed Chair Powell Speaks

*All release times are DST

*Key events are in bold

GBP/USD for Tuesday, October 2, 2018

GBP/USD October 2 at 12:15 DST

Open: 1.3040 High: 1.3049 Low: 1.2941 Close: 1.2992

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2723 1.2852 1.2966 1.3088 1.3173 1.3301

GBP/USD was flat in the Asian session. The pair posted considerable losses in European trade and has edged higher in North American trade

  • 1.2966 was tested earlier in support
  • 1.3088 is the next resistance line
  • Current range: 1.2966 to 1.3088

Further levels in both directions:

  • Below: 1.2966, 1.2852 and 1.2723
  • Above: 1.3088, 1.3173, 1.3301, 1.3458

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.