GBP/USD - Rangebound As U.K. Manufacturing PMI Meets Expectations

 |  Includes: FXB, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

GBP/USD continues to trade quietly at the start of the trading week. In Monday’s North American session, the pair is trading in the mid-1.67 range. On the UK release front, British PMIs are the main event of the week, and as expected, Manufacturing PMI showed little change in May. Net Lending to Individuals softened last month. In the US, the ISM Manufacturing PMI disappointed and it lost ground and fell short of the forecast.

British Manufacturing PMI showed little change, coming in at 57.0 points, almost identical to the estimate of 57.1. The index remains at high levels, which is a sign of solid economic growth in Q2. The news was not as cheery from Net Lending to Individuals, which slipped to 2.4 billion pounds, down substantially from 2.9 billion a month earlier. The estimate stood at 2.7 billion. Less borrowing by consumers likely means a decrease in consumer spending, which is an important engine of economic growth. We’ll get a look at Construction PMI on Tuesday.

US numbers didn’t look sharp to start the week, as ISM Manufacturing PMI, a key release, dropped to 53.2 points, well off the estimate of 55.7. The index had been moving higher throughout 2014, but this trend came to a crashing halt in the May reading. We’ll get another look at important factory data on Tuesday, with the release of Factory Orders. The indicator has been losing ground, and the markets are bracing for another drop in the May release.

Last week’s US data was a mix . Preliminary GDP, the primary gauge of economic activity, posted its first decline since Q2 of 2009. The indicator came in at -1.0% for Q1, worse than the estimate of -0.6%. Harsh winter conditions took their toll on the economy in Q1, and analysts expect a rebound in Q2. After a strong gain in March, Pending Home Sales softened, coming in at 0.4%. This was nowhere near the gain of 1.1%. On a brighter note, Employment Claims dropped to 300 thousand, easily beating the estimate of 321 thousand. As well, CB Consumer Confidence remains at high levels.

GBP/USD for Monday, June 2, 2014

GBP/USD June 2 at 15:35 GMT

GBP/USD 1.6754 H: 1.6762 L: 1.6726

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6436 1.6549 1.6705 1.6765 1.6896 1.700
Click to enlarge
  • GBP/USD is showing little movement on Monday.
  • On the upside, 1.6765 is a weak resistance line. 1.6896 is stronger.
  • 1.6705 is providing weak support. 1.6549 is stronger.
  • Current Range; 1.6705 to 1.6765

Further levels in both directions:

  • Below: 1.6705, 1.6549, 1.6436 and 1.6346
  • Above: 1.6765, 1.6896, 1.70, 1.7210 and 1.7374

OANDA’s Open Positions Ratio

GBP/USD ratio is pointing to gains in short positions in Monday trade. This is not consistent with what we are seeing from the pair, which is not showing much movement. A majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar posting gains against the pound.

GBP/USD is listless on Monday. In the North American session, the pair is unchanged.

GBP/USD Fundamentals

  • 8:30 British Manufacturing PMI. Estimate 57.1 points. Actual 57.0 points.
  • 8:30 British Net Lending to Individuals. Estimate 2.7B. Actual 2.4B.
  • 8:30 British M4 Money Supply. Estimate 0.3%. Actual-0.2%.
  • 8:30 British Mortgage Approvals. Estimate 64K. Actual 63K.
  • 12:40 US Treasury Secretary Jack Lew Speaks.
  • 13:45 US Final Manufacturing PMI. Estimate 56.2 points. Actual 56.4 points.
  • 14:00 US ISM Manufacturing PMI. Estimate 55.7 points. Actual 53.2 points.
  • 14:00 US Construction Spending. Estimate 0.8%. Actual 0.2%.
  • 14:00 US ISM Manufacturing Prices. Estimate 56.8 points. Actual 60.0 points.

*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.