GBP/USD – Pound Shrugs Off Weak Services PMI

GBP/USD is steady in Wednesday, as the pair trades in the low-1.63 range in the North American session. Taking a look at economic releases, British Services PMI was a disappointment, losing ground in January and falling short of the estimate. In the US, ADP Non-Farm Employment Change took a tumble, while the ISM Non-Manufacturing PMI slowed slight improvement.

British PMIs were the focus this week. Services PMI dropped slightly to 58.3 points, missing the estimate of 59.1 points. Construction PMI looked very sharp, rising to 64.6 points, its highest level since August 2007. This easily beat the estimate of 61.6 points. Earlier in the week, Manufacturing PMI looked weak, dipping to 56.7 points and falling short of the estimate of 57.1 points. Is the hot British economy slowing down? If upcoming UK releases fall short of the forecast, the markets will likely get nervous and the pound could take a drop against the US dollar.

In the US, ADP Non-Farm Employment took a hit, sliding to 175 thousand, compared to 238 thousand a month earlier. This was well shy of the estimate of 191 thousand. Is the ADP release a prelude to the official Non-Farm Payrolls report on Friday? If the NFP falters as well, the Fed could delay its next QE taper and the negative message this would send could hurt the US dollar.

GBP/USD for Wednesday, February 5, 2014

GBP/USD February 5 at 16:50 GMT

GBP/USD 1.6301 H: 1.6341 L: 1.6253

GBP/USD Technical

• GBP/USD is trading quietly in Wednesday trading. The pair touched a low of 1.6253 in the European session but has moved higher.
• On the downside, 1.6231 is providing support to the pair. This is followed by support at 1.6125.
• 1.6329 is a weak resistance line and could break in the North American session. This is followed by resistance at 1.6416.
• Current range: 1.6231 to 1.6329

Further levels in both directions:

• Below: 1.6231, 1.6125, 1.6050, 1.60 and 1.5915
• Above: 1.6329, 1.6416, 1.6549, 1.6705 and 1.6964

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Wednesday, continuing the trend we have seen since last week. This is not consistent with the movement of the pair, as the pound has posted slight losses. A majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar rally continuing.

The pound is trading just above the 1.63 line on Wednesday. GBP/USD has moved slightly higher in the North American session.

GBP/USD Fundamentals

• 00:01 British BRC Shop Price Index. Estimate -1.0%.
• 9:30 British Services PMI. Estimate 59.1 points. Actual 58.3 points.
• 13:15 US ADP Non-Farm Employment Change. Estimate 191K. Actual 175K.
• 14:00 US Final Services PMI. Estimate 56.6 points. Actual 56.7 points.
• 15:00 US ISM Non-Farm Manufacturing PMI. Estimate 53.6 points. Actual 54.0 points.
• 15:00 US FOMC Member Daniel Tarullo Speaks.
• 15:30 US Crude Oil Inventories. Estimate. 2.2M. Actual 0.4M.
• 17:30 US FOMC Member Charles Plosser Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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.