GBP/USD has ticked higher in the Monday session. Currently, GBP/USD is trading at 1.2645, up 0.11% on the day. On the fundamentals front, the focus is on manufacturing releases. British Manufacturing PMI slowed to 49.4, missing expectations. Later on, the U.K. releases BRC Retail Sales Monitor, with an estimate of 0.9%. In the U.S., ISM Manufacturing PMI dropped to 52.1, short of the estimate of 53.0. On Tuesday, the U.K. releases Construction PMI.
It was a sour start to the week for British fundamentals, as manufacturing PMI dipped below the 50-level, which separates expansion from contraction. The PMI dropped to 49.4, marking the first contraction since July 2016. Although the pound has held its own on Monday, the unexpected contraction could unnerve investors and weigh on the pound. Manufacturing news from the U.S. also disappointed, as ISM Manufacturing PMI slowed to 52.1, down from 53.0 a month earlier. Global demand has fallen off due to trade tensions, and unless this situation improves, manufacturing sectors across the globe will remain under strong pressure.
The U.S. economy continues to perform well, with first-quarter growth above the 3% level. Second estimate GDP posted a gain of 3.1%, matching the estimate. This was just shy of the initial estimate in April, which came in at 3.1%. The U.S. economy is firing on all cylinders, despite the nasty trade war with China, which has escalated in recent weeks. U.S. officials, including President Trump, had announced that substantial progress had been made, and it seemed that a trade deal was just around the corner. However, Trump shocked the markets by slapping further tariffs on China, which led to counter-tariffs against U.S. products. China has reacted angrily to U.S. trade sanctions on Huawei, a giant Chinese telecom company. If there are no signs of progress in the U.S.-China trade war, investors could opt for the safety of the greenback, which could hurt the British pound.
Monday (June 3)
- 4:30 British Manufacturing PMI. Estimate 52.5. Actual 49.4
- 9:10 FOMC Member Quarles Speaks
- 9:45 US Final Manufacturing PMI. Estimate 50.8. Actual 50.5
- 10:00 US ISM Manufacturing PMI. Estimate 53.0. Actual 52.1
- 10:00 US Construction Spending. Estimate 0.5%
- 10:05 ISM Manufacturing Prices. Estimate 51.5
- All Day – U.S. Wards Total Vehicle Sales. Estimate 16.8M
- 13:25 US FOMC Member Bullard Speaks
- 19:01 British BRC Retail Sales Monitor. Estimate 0.9%
Tuesday (June 4)
- 4:30 British Construction PMI. Estimate 50.6
*All release times are DST
*Key events are in bold
GBP/USD for Monday, June 3, 2019
GBP/USD June 3 at 10:45 DST
Open: 1.2632 High: 1.2661 Low: 1.2610 Close: 1.2645
GBP/USD was flat in the Asian session. The pair posted losses in European trade but has recovered in the North American session
- 1.2615 is a weak support level. It was tested earlier in the day.
- 1.2723 is the next resistance line
- Current range: 1.2615 to 1.2723
Further levels in both directions:
- Below: 1.2615, 1.2477 and 1.2401
- Above: 1.2723, 1.2841, 1.2910 and 1.3000
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