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By Kenny Fisher

The British pound has started off the week with gains, as GBP/USD trades in the mid-1.59 range in Monday's North American session. Taking a look at economic news, British Construction PMI jumped to its highest levels in over six years. In the U.S., it's a quiet Monday. The day's only economic data was Factory Orders, which fell short of the estimate in both August and September (the August data had been delayed due to the US government shutdown).

It was a great start for U.K. releases, as Construction PMI climbed to 59.4 points in October, its best reading since September 2007. The estimate stood at 58.9, which was the September reading. Construction PMI, which was below the 50 level as late as May, continues to improve, pointing to stronger expansion in the U.K. construction industry. Services PMI will be released on Tuesday and the markets are expecting another strong reading.

The Federal Reserve met for a policy meeting last week, the first since Congress reached an agreement on the debt ceiling and the shutdown. As expected, the Fed said that it would maintain QE at current levels of $85 billion each month. However, the Fed's policy statement was less dovish than expected, as the Fed noted that the economy was expanding "at a moderate pace" and left the door open for QE tapering in December. However, the prevailing view in the markets is that short of a sharp turnaround in U.S. numbers, QE tapering will be on hold until early 2014.

After a host of weak numbers early in the week, U.S. numbers showed some improvement. Unemployment Claims practically matched the forecast, and ISM Manufacturing PMI beat the estimate. With the Fed unlikely to taper QE before 2014, the QE uncertainty which was has been weighing on the dollar has eased, which could bolster the U.S. dollar.

GBP/USD for Monday, November 4, 2013

Forex Rate Graph 21/1/13

GBP/USD November 4 at 15:30 GMT

GBP/USD 1.5958 H: 1.5978 L: 1.5903

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.5645 1.5756 1.5877 1.6000 1.6125 1.6231

  • GBP/USD has posted gains on Monday, as the pair trades in the mid-1.59 range.
  • The pair continues to face resistance at the key 1.6000 level. This line could face pressure if the pound continues to move to higher ground. This is followed by resistance at 1.6125.
  • On the downside, there is support at 1.5877. This is followed by a support level at 1.5756.
  • Current range: 1.5877 to 1.6000.

Further levels in both directions:

  • Below: 1.5877, 1.5756 and 1.5645 and 1.5537
  • Above: 1.6000, 1.6125, 1.6231 and 1.6300

OANDA's Open Positions Ratio

Short positions continue to dominate the open positions, reflecting a trader bias towards the U.S. dollar moving to higher ground.

The pound has started off the week with gains, taking advantage of a superb Construction PMI. With no major U.S. releases on Monday, any further gains by the pound in the North American session will likely be limited in nature.

GBP/USD Fundamentals

  • 9:30 British Construction PMI. Estimate 58.9 points. Actual 59.4 points.
  • 15:00 U.S. Factory Orders. Estimate 1.9%. Actual 1.7%.
  • 15:00 U.S. Factory Orders (Aug. Data). Estimate 0.2%. Actual -0.1%.
  • 16:40 U.S. FOMC Member Jerome Powell Speaks.
  • 21:00 U.S. FOMC Member Eric Rosengren Speaks.

*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.

Source: GBP/USD - Pound Gains Ground As Construction PMI Sparkles