GBP/USD – Pound under pressure as construction PMI points south

GBP/USD has lost ground in the Monday session, after two straight losing sessions. In North American trade, the pair is trading at 1.3181, down 0.18% on the day. In economic news, British Construction PMI slipped to 49.5 points, short of the estimate of 50.5 points. There are no major U.S. events. On Tuesday, the U.K. releases Services PMI and BoE Governor Mark Carney testifies before the House of Lords. We’ll also get a look at the services sector in the U.S. with the release of ISM Non-Manufacturing PMI.

The pound is under pressure, dropping 1.0 percent in Thursday. There was disappointing data on Monday, as Construction PMI dropped to 49.5, below the 50-level which separates construction and expansion. The February reading was the first time that the PMI has indicated contraction since March 2018. The turmoil over Brexit is at least partly to blame for the soft PMI, as clients re-evaulate whether to take on commercial projects in a time of uncertainty.

With the clock ticking down towards Brexit Day on March 29, there is a flurry of activity in Westminster. Prime Minister May made headlines last week when she announced another vote on the government’s withdrawal agreement, which is scheduled for March 12. If lawmakers reject that proposal, they will vote the next day on two separate proposals – one on a no-deal Brexit, and the second on requesting the EU to extend Article 50 and delay Brexit past March 29. Investors are confident that this makes a no-deal scenario even more unlikely, which resulted in gains of 2.0% for the pound last week. However, with plenty of turmoil and uncertainty around the Brexit withdrawal, we could see volatility from the pound in the days leading to the parliamentary votes.

Stocks get the green light from trade talks

Trade talk hopes suggest positive start for Europe

GBP/USD Fundamentals

Monday (March 4)

  • 4:30 British Construction PMI. Estimate 50.5. Actual 49.5
  • 10:00 U.S. Construction Spending. Estimate 0.2%. Actual 0.2%
  • 19:01 British BRC Retail Sales Monitor. Estimate 0.1%

Tuesday (March 5)

  • 4:30 British Services PMI. Estimate 50.0
  • 4:30 British FPC Minutes
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 57.4
  • 10:35 BoE Governor Carney Speaks

*All release times are EST

*Key events are in bold

GBP/USD for Monday, March 4, 2019

GBP/USD March 4 at 11:50 EST

Open: 1.3206 High: 1.3356 Low: 1.3167 Close: 1.3181

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2910 1.3070 1.3170 1.3258 1.3362 1.3460

GBP/USD was flat in the Asian session. The pair posted showed limited movement in the European session and is flat in North American trade

  • 1.3170 was tested earlier in resistance. It remains a weak line and could break in the North American session
  • 1.3258 is the next resistance line
  • Current range: 1.3170 to 1.3258

Further levels in both directions:

  • Below: 1.3170, 1.3070 and 1.2910
  • Above: 1.3258, 1.3362, 1.3460 and 1.3350

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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