GBP/USD – British pound steady as U.K and U.S post strong manufacturing data

GBP/USD is showing limited movement in the Monday session. In North American trade, the pair is trading at 1.2744, down 0.05% on the day. In economic news, manufacturing data was in focus on both sides of the pond. British Manufacturing PMI improved to 53.1, its strongest level in four months. This beat the estimate of 51.6 points. There was positive news in the U.S. as well, as the ISM Manufacturing PMI expanded to 59.3, above the forecast of 57.5 points. On Tuesday, the U.K. releases Construction PMI.

Investors gave a thumbs-up to the meeting between President Trump and Chinese President Xi Jinping, which was held on the sidelines of the G-20 summit. Just last week, Trump had threatened to raise tariffs on $200 billion in Chinese products from 10 percent to 25 percent on January 1. However, the tone was optimistic after the meeting, with China receiving a short reprieve. The sides have agreed to continue talks for another 90 days, and the U.S. tariffs will take effect if no agreement is reached. The markets were clearly relieved that the tariff war has de-escalated, and global stock markets have reacted with strong gains. At the same time, the U.S. and China remain far apart on resolving the trade war, and the greenback will likely reverse directions unless the parties make substantial progress in the trade dispute, which has shaken the markets and threatens to derail global growth.

Prime Minister May faces a tough week ahead, as she tries to convince a skeptical parliament to approve the withdrawal agreement with the European Union. There is strong opposition to the deal, and some Conservative MPs are also unhappy with the deal, fearing that the U.K. will be tied indefinitely to a customs union with the EU. It is also unclear if the withdrawal agreement allows Britain to negotiate trade deals with other countries, despite May’s assurances that U.K will be able to do so. With parliament voting on the deal on December 11, the rhetoric on both sides promises to heat up, and traders should expect some volatility from the pound during this period.

Xi-Trump “dinner date of the decade ” ended with a “handshakeplus”

Aussie at 3-month high on trade war truce

Truce – all is good, oil rallies 5%, dollar down and yields higher

GBP/USD Fundamentals

Monday (December 3)

• 4:30 British Manufacturing PMI. Estimate 51.6. Actual 53.1
• 6:30 US FOMC Member Clarida Speaks
• 8:00 US FOMC Member Quarles Speaks
• 9:15 US FOMC Member Williams Speaks
• 9:45 US Final Manufacturing PMI. Estimate 55.4. Actual 55.3
• 10:00 US ISM Manufacturing PMI. Estimate 57.5. Actual 59.3
• 10:00 US Construction Spending. Estimate 0.4%. Actual -0.1%
• 10:00 US ISM Manufacturing Prices. Estimate 70.1. Actual 60.7
• All Day – US Total Vehicle Sales. Estimate 17.3M
• 10:30 US FOMC Member Brainard Speaks

Tuesday (December 4)

• 4:30 British Construction PMI. Estimate 52.5

*All release times are EST

*Key events are in bold

GBP/USD for Monday, December 3, 2018

GBP/USD December 3 at 6:40 EST

Open: 1.2751 High: 1.2825 Low: 1.2699 Close: 1.2744

GBP/USD Technical

GBP/USD edged higher in the Asian session. The pair reversed directions and headed lower in European trade, but has recovered some of those losses in North American trade

• 1.2706 is providing support
• 1.2812 is the next resistance line
• Current range: 1.2706 to 1.2812

Further levels in both directions:

• Below: 1.2706, 1.2589 and 1.2488
• Above: 1.2812, 1.2915, 1.3048 and 1.3173

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