GBP/USD – Pound Dips to 3-Week Lows Despite Strong PMI

GBP/USD continues to lose ground on Thursday, as the pair trades in the low-1.61 range in the North American session. The pair is currently at its lowest levels in three weeks. On the release front, British Construction PMI improved to 64.2 points last month, above expectations. Over in the US Unemployment Claims looked solid, dropping to 287 thousand, down from 293 thousand a month earlier. The news was not all good, as Factory Orders plunged by 10.1%.

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. This follows a weak Manufacturing PMI, which slipped to its lowest level in 16 months. We’ll get a look at Services PMI on Friday, with the markets expecting a slight drop in the reading.

In the US, employment numbers are showing improvement. US Unemployment Claims dropped to 287 thousand, beating the estimate of 299 thousand. ADP Nonfarm Payrolls surprised with a strong gain, climbing to 213 thousand, compared to 204 thousand in the previous release. This beat the estimate of 207 thousand. The ADP release precedes the official NFP release, which will be published on Friday. The markets are anticipating a sharp gain, with an estimate of 216 thousand. If the indicator does follow suit with a solid reading, the US dollar could post further gains against its major rivals.

On the manufacturing and housing fronts, this week’s US numbers were disappointing. ISM Manufacturing PMI fell to 56.6 points, down from 59.0 points a month earlier. US Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. On Friday, we’ll get a look at ISM Non-Manufacturing PMI, with the markets braced for a softer reading for September.

GBP/USD for Thursday, October 2, 2014

GBP/USD October 2 at 15:45 GMT

GBP/USD 1.6131 H: 1.6251 L: 1.6113

GBP/USD Technical

• GBP/USD posted gains in the Asian session, touching a high of 1.6251. The pair then reversed directions late in the session and posted sharp losses in European trading, breaking below support at 1.6141.
• The round number of 1.6000 is providing strong support.
• 1.6141 has reverted to a resistance line. It is a weak line and could see further action during the day. 1.6263 is stronger.
• 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 Thursday. This is not consistent with the pair’s movement, as the pound has posted gains. The pair is almost evenly split between long and short positions, indicative of a lack of trader bias as to what direction we can next expect the pair to take.

GBP/USD Fundamentals

• 8:30 British Construction PMI. Estimate 64.2 points. Actual 63.7 points.
• 12:30 US Unemployment Claims. Estimate 299K. Actual 287K.
• 14:00 US Factory Orders. Estimate -9.4%. -10.1%.
• 14:30 US Natural Gas Storage. Estimate 107B. Actual 112B.

* Key releases are highlighted in bold

*All release times are GMT

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