GBP/USD has posted slight gains in the Tuesday session. Currently, GBP/USD is trading at 1.2689, up 0.20% on the day. On the fundamentals front, British Construction PMI disappointed, with a score of 48.6, indicating contraction. This missed the estimate of 50.6 points. In the U.S., the sole event was Factory Orders. The indicator declined by 0.8%, above the estimate of -1.0%. This marked the second decline in three months. On Wednesday, the U.K. releases Services PMI. The U.S. releases ADP payrolls and ISM Non-Manufacturing PMI.
British PMIs, which are key gauges of the economic activity, dropped into contraction territory in April. Construction PMI fell to 48.6, its third decline in four months. This followed a manufacturing PMI of 49.4, marking the first contraction since July 2016. Manufacturing news from the U.S. also disappointed, as ISM Manufacturing PMI slowed to 52.1, down from 53.0 a month earlier. This was the PMI’s weakest reading since November 2018. Global demand has fallen off due to trade tensions, and unless this situation improves, manufacturing in the U.K and the U.S. could continue to head downwards.
The Federal Reserve has sounded neutral about the direction of a rate move, but the markets are expecting a rate cut, and the president of the St. Louis Fed came out in favor of a cut on Monday. James Bullard was blunt and pessimistic, saying that the Fed might have to lower rates shortly due to low inflation and the ongoing trade war with China. Bullard warned that the Fed may have to deal with “an economy that is expected to grow more slowly going forward, with some risk that the slowdown could be sharper than expected due to ongoing global trade regime uncertainty“. Bullard added that the current benchmark rate, which is at a range of 2.25% to 2.50%, is too high for current economic conditions, and recommended lowering rates in order to stabilize the economy.
Tuesday (June 4)
- 4:30 British Construction PMI. Estimate 50.6. Actual 48.6
- 8:30 US FOMC Member Williams Speaks
- 9:55 Federal Reserve Chair Jerome Powell Speaks
- 10:00 US Factory Orders. Estimate -1.0%. Actual -0.8%
Wednesday (June 5)
- 4:30 British Services PMI. Estimate 50.6
- 8:15 US ADP Nonfarm Employment Change. Estimate 185K
- 10:00 US ISM Non-Manufacturing PMI. Estimate 55.6
*All release times are DST
*Key events are in bold
GBP/USD for Tuesday, June 4, 2019
GBP/USD June4 at 10:45 DST
Open: 1.2664 High: 1.2709 Low: 1.2642 Close: 1.2689
GBP/USD was flat in the Asian session. The pair posted losses in European trade but then recovered. The pair is steady in the North American session
- 1.2615 is providing support
- 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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