GBP/USD – Pound’s Woes Continue as US Job Numbers Shine

It has been a week to forget for the pound, as GBP/USD has shed over 200 points. Early in the European session, the pair is trading at the 1.60 line, its lowest level in three weeks. On the release front, UK Services PMI dropped to 58.7 points. In the US, Nonfarm Employment Change and the unemployment rate sparkled and the pound has dropped sharply in response.

British Services PMI softened in September. The index dropped to 58.7 points, down from 60.5 points a month earlier. The estimate stood at 59.1. Earlier in the week, Construction PMI improved to 64.2 points last month, beating the estimate of 63.7 points. This marked a fourth straight increase and the indicator’s highest level in 8 months. However, Manufacturing PMI disappointed at 51.6 points, its lowest level in 16 months.

US employment data is in the spotlight on Friday. Nonfarm Employment change rebounded in September, climbing to 248 thousand. This exceeded expectations of 216 thousand. The unemployment rate dipped to 5.9%, the first time it’s been below the 6% threshold in over six years. With QE slated to end later this month, the focus will shift to the timetable for an interest rake hike. Strong job numbers such as these could put pressure on the Fed to make an interest rate move sooner rather than later. Elsewhere, the trade deficit was largely unchanged in September and we’ll get a look at ISM Non-Manufacturing PMI later in the day. The markets are expecting weaker numbers in the upcoming release.

GBP/USD for Friday, October 3, 2014

GBP/USD October 3 at 12:50 GMT

GBP/USD 1.6003 H: 1.6157 L: 1.6003

GBP/USD Technical

• GBP/USD was steady in the Asian session. The pair posted sharp losses in the European session and this continues in North American trade.
• The round number of 1.6000 is under strong pressure and could break during the day. 1.5864 is the next support level.
• On the upside, 1.6141 has strengthened as the pound has dropped to lower levels.
• Current range: 1.6000 to 1.6141.

Further levels in both directions:

• Below: 1.6000, 1.5864, 1.5717 and 1.5644
• Above: 1.6141, 1.6263, 1.6382, 1.6484 and 1.6605

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in long positions on Friday. This is not consistent with the pair’s movement, as the pound has posted sharp losses. The pair has a majority of long positions, indicative of trader bias towards the pound reversing its downward slide.

GBP/USD Fundamentals

• 8:30 British Services PMI. Estimate 59.1 points. Actual 58.7 points.
• 12:30 US Nonfarm Employment Change. Estimate 216K. Actual 248K.
• 12:30 US Trade Balance. Estimate -41.0B. Actual -40.1B.
• 12:30 US Unemployment Rate. Estimate 6.1%. Actual 5.9%.
• 12:30 US Average Hourly Earnings. Estimate 0.2%. Actual 0.0%.
• 13:45 US Final Services PMI. Estimate 58.5 points.
• 14:00 US ISM Non-Manufacturing PMI. Estimate 58.5 points.

* Key releases are highlighted in bold

*All release times are GMT

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