By Kenny Fisher
GBP/USD has posted losses on Wednesday, as the pair trades in the mid-1.68 range. The pound continues to struggle as it trade close to seven-week lows. On the release front, UK Manufacturing Production posted a small gain of 0.3%. In the US, the trade deficit narrowed in July.
In the US, the trade deficit unexpectedly narrowed in July, dropping to -$41.5 billion. This was the lowest deficit since April, and easily beat the estimate of $-44.2 billion. Trade Balance is closely linked to currency demand, since foreigners must purchase the local currency in order to buy domestic goods and services.
UK Manufacturing Production, a key event, improved in July, posting a 0.3% gain. However, the markets had expected more, with an estimate of 0.7%. Elsewhere, Halifax HPI jumped 1.1%, a three-month high. NIESR GDP Estimate gained just 0.6%, its lowest gain since June 2013. This monthly indicator helps analysts track official GDP, which is released every quarter. Softer readings such as Manufacturing Production and NIESR GDP Estimate have raised concerns that the British economy may be slowing down, and as a result, speculation about a rate hike has faded somewhat.
British PMIs are closely tracked by analysts, as they are important gauges of the health of key sectors in the British economy. Construction PMI posted a strong figure of 62.4 points last month, beating the estimate of 62.1 points. The index has been above the 60-point level since November, pointing to strong expansion in the UK construction sector. Last week, Manufacturing PMI softened in March, dropping to 55.4 points, short of the estimate of 57.2 points. This was the indicator's lowest level since March. We'll get a look at Services PMI on Tuesday.
GBP/USD for Wednesday, August 6, 2014
GBP/USD August 6 at 15:30 GMT
GBP/USD 1.6833 H: 1.6884 L: 1.6822
- GBP/USD showed small losses in the Asian session and weakened further in European trading. The pair is unchanged in North American trade.
- On the downside, 1.6825 was briefly breached earlier in the day and remains under strong pressure. The round number of 1.67 is stronger.
- 1.6920 is providing strong resistance.
- Current range: 1.6825 to 1.6920.
Further levels in both directions:
- Below: 1.6825, 1.6700, 1.6556 and 1.6484
- Above: 1.6920, 1.7000, 1.7183 and 1.7228
OANDA's Open Positions Ratio
GBP/USD is pointing to gains in short positions in Wednesday trade. This is consistent with the movement of the pair, as the pound has lost ground. The ratio is almost split evenly between long and short positions, indicative of a lack of trader bias as to what direction to expect from the pair.
- 8:30 British Manufacturing Production. Estimate 0.7%. Actual 0.3%.
- 8:30 British Industrial Production. Estimate 0.6%. Actual 0.3%.
- 12:30 US Trade Balance. Estimate -44.2B. Actual -41.5B.
- 13:55 British NIESR GDP Estimate. Actual 0.6%.
- 14:30 US Crude Oil Inventories. Estimate -1.1M. Actual -1.8M.
* 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.