GBP/USD – Little Movement As Construction PMI Misses Forecast

The GBP/USD continues to have an uneventful week, as the pair shows little activity on Wednesday. GBP/USD is trading in the low-1.66 range early in the North American session. In economic news, UK Construction PMI remained steady but fell short of the estimate. In the US, ADP Nonfarm Payrolls posted strong gains in February. Factory Orders rebounded nicely, posting a three-month gain.

ADP Nonfarm Payrolls met high expectations, as the release jumped to 191 thousand, up from 139 thousand a month earlier. This practically matched the estimate of 192 thousand. The markets will get a good look at the US employment picture in the next few days, with Unemployment Claims, the Unemployment Rate and the all-important NFP still to come.

In the UK, Construction PMI was almost unchanged, posting a reading of 62.5 points. Although this is a strong reading, the markets had expected a stronger reading, with the estimate standing at 63.1 points. This follows a disappointing PMI Manufacturing release, which dropped to 55.3 points, its lowest level since June. We’ll get a look at Services PMI on Thursday. The markets are expecting no change from last month’s release of 58.2 points.

Earlier in the week, Fed chair Janet Yellen said that inflation and employment levels needed to improve considerably, and the Federal Reserve would continue to provide monetary stimulus for some time. Currently, the Fed is purchasing $55 billion in assets under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence. At the same time, the Federal Reserve has stated that it has no plans to raise interest rates until sometime in 2015.

GBP/USD for Wednesday, April 2, 2014

GBP/USD April 2 at 16:05 GMT

GBP/USD 1.6634 H: 1.6662 L: 1.6622

GBP/USD Technical

• GBP/USD is showing little movement on Wednesday. The pair touched a high of 1.6662 early in the European session.
• On the downside, 1.6549 is a strong support level.
• 1.6705 continues to provide resistance. This is followed by resistance at 1.6765.
• Current range: 1.6549 to 1.6705.

Further levels in both directions:

• Below: 1.6549, 1.6416, 1.6329, 1.6236 and 1.6146
• Above: 1.6705, 1.6765, 1.6896 and 1.6964

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged on Wednesday. This is consistent with what we are seeing from the pair, as the pound has showed little movement. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar moving higher against the pound.

The pound is trading quietly in the mid-1.66 range. GBP/USD is unchanged in the North American session.

GBP/USD Fundamentals

• 8:30 British Construction PMI. Estimate 63.1 points. Actual 62.5 points.
• 8:30 BOE Credit Conditions Survey.
• 8:30 British Housing Equity Withdrawal.
• 12:15 US ADP Nonfarm Employment Change. Estimate 192K. Actual 191K.
• 14:00 US Factory Orders. Estimate 1.3%. Actual 1.6%.
• 14:30 US Crude Oil Inventories. Estimate 1.3M. Actual -2.4M.

*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.