GBP/USD – British pound dips on lukewarm construction PMI

GBP/USD continues to lose ground in the Tuesday session. In North American trade, the pair is trading at 1.3138, down 0.32% on the day. The pound has dropped 1.4% since February 28. In economic news, British Services PMI came in at 51.3, above the forecast of 50.0 points. BoE Governor Mark Carney will testify before the House of Lords. In the U.S., ISM Non-Manufacturing PMI improved sharply to 59.7 points, up from 56.7 in the previous release. This marked a 3-month high.

PMIs are important gauges of the strength of the British economy, and the February numbers have been less than impressive. Services PMI edged up to 51.3, above the 50-level which separates contraction from expansion. Still, the reading points to stagnation in the services sector. On Monday, construction PMI dropped to 49.5, the first time that the PMI has indicated contraction since March 2018. The turmoil over Brexit is at least partly to blame for soft construction numbers, as clients re-evaluate whether to take on commercial projects in a time of uncertainty. Last week, manufacturing PMI dipped to 52.0, marking a 4-month low.

The focus will be on U.S. employment numbers for the remainder of the week. Will this data boost the U.S. dollar? Analysts are expecting mixed numbers on Friday. Wage growth is expected to improve to 0.3%, but nonfarm payrolls are projected to slide to 185 thousand, after a strong gain of 304 thousand in the previous release. The unemployment rate has been at record lows, and is expected to dip to a sizzling 3.9% in the February report.

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GBP/USD Fundamentals

Tuesday (March 5)

  • 4:30 British Construction PMI. Estimate 50.0. Actual 51.3
  • 4:30 British FPC Minutes
  • 7:30 US FOMC Member Rosengren Speaks
  • 9:45 US Final Services PMI. Estimate 56.2. Actual 56.0
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 57.4. Actual 59.7
  • 10:00 US New Home Sales. Estimate 597K. Actual 621K
  • 10:01 US IBD/TIPP Economic Optimism. Estimate 51.2. Actual 55.7
  • 14:00 US Federal Budget Balance. Estimate 17.3B

Wednesday (March 6)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 190K

*All release times are EST

*Key events are in bold

GBP/USD for Tuesday, March 5, 2019

GBP/USD March 5 at 10:25 EST

Open: 1.3181 High: 1.3199 Low: 1.3098 Close: 1.3138

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2831 1.2910 1.3070 1.3170 1.3258 1.3362

GBP/USD ticked lower in the Asian session and posted considerable losses in European trade. The pair is showing stronger movement in North American trade

  • 1.3070 is providing support
  • 1.3170 has switched to a resistance role as GBP/USD continues to lose ground
  • Current range: 1.3070 to 1.3170

Further levels in both directions:

  • Below: 1.3070 and 1.2910 and 1.2831
  • Above: 1.3170, 1.3258, 1.3362 and 1.3460

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, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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