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Monday, November 03, 2014

GBP/USD – Dollar Holds Steady as UK, US Post Strong Manufacturing PMIs

GBP/USD is showing limited movement on Monday, as the pair trades in the mid-1.59 range in North American trade. On the release front, British Manufacturing PMI climbed in September, with a reading of 53.2 points. In the US, it was a similar story as ISM Manufacturing PMI improved to 59.0 points.

US releases started off the weak on a positive note as ISM Manufacturing PMI climbed to 59.0 points, a strong improvement from the previous release of 56.6 points. On Friday, UoM Consumer Sentiment continued its upward trend, improving to 86.9 points. British Manufacturing PMI also showed unexpected strength, as the indicator hit 53.2 points, compared to 51.6 points a month earlier. This beat the estimate of 51.5.
It was another solid performance from US GDP on Thursday, which posted a strong gain of 3.5% in Q3, ahead of the estimate of 3.1%. Although this was short of the Q2 reading of 4.0%, the two readings mark the strongest six-month gain we’ve seen in ten years. Unemployment Claims increased slightly to 287 thousand, slightly higher than the previous reading of 284 thousand. However, the four-week average remains at multi-year lows, pointing to an improving labor market.
The US dollar posted broad gains on Wednesday, boosted by a hawkish Federal Reserve policy statement. The Fed said that the labor market is strengthening and inflation remains on target, although it did note that the labor market participation rate remains low. As expected the Fed completed the taper of its QE3 program. The asset-purchase program was initially started in 2008, at the height of the economic crisis, in order to boost a weak US economy. The termination of the QE is a symbolic step which is a vote of confidence from the powerful Fed that the US economy is on the right track.
GBP/USD for Monday, November 3, 2014

GBP/USD November 3 at 16:15 GMT
GBP/USD 1.5974 H: 1.6021 L: 1.5927

GBP/USD Technical
S3 S2 S1 R1 R2 R3
1.5644 1.5717 1.5864 1.6000 1.6141 1.6263

  • GBP/USD showed little movement in the Asian session. The posted gains in the European session, breaking above resistance at the round number of 1.6000. The pair is steady in North American trading.
  •  15864 is providing strong support.
  • The round number of 1.6000 continues to see action and has reverted to a resistance role. Will the pair break below this weak line? 1.6141 is stronger.
  • Current range: 1.5864 to 1.6000
Further levels in both directions:
  • Below: 1.5864, 1.5717, 1.5644 and 1.5505
  • Above: 1.6000, 1.6141, 1.6263, 1.6382 and 1.6524

OANDA’s Open Positions Ratio
GBP/USD ratio is almost unchanged on Monday. This is consistent with GBP/USD, which has shown little net movement on the day. The ratio has a majority of long positions, indicative of trader bias towards the pound posting gains.

GBP/USD Fundamentals
  • 9:30 British Manufacturing PMI. Estimate 56.1 points. Actual 55.9 points.
  • 14:45 US Final Manufacturing PMI. Estimate 56.1 points. Actual 55.9 points.
  • 15:00 US ISM Manufacturing PMI. Estimate 56.5 points. Actual 59.0 points.
  • 15:00 US Construction Spending. Estimate +0.8%. Actual -0.4%.
  • 15:00 US ISM Manufacturing Prices. Estimate 58.3 points. Actual 53.5 points.
  • All Day – US Total Vehicle Sales. Estimate 16.6M.

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