GBP/USD Overlooks UK Construction PMI; Focus Turns To US Manufacturing
- UK Construction PMI (Aug): 64.0 Actual Vs 61.5 Estimated; 62.5 Prior.
- GBP/USD Remain Relatively Muted Despite Roaring UK Construction PMI.
- Looking Ahead BoE Rate Decision (Sep): 0.50% Estimated; 0.50% Prior.
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According to data compiled by Markit/CIPS, UK Construction PMI accelerated to 64.0 in August compared to 62.4 reported in July. This is the fastest reading in eight-months and exceeded market expectations of 61.5.
Before the data, the British Pound managed to recover some of the earlier losses against the US Dollar to trade firmly below 1.6600 level. Immediately after the release of the better-than-expected Construction PMI data, GBP/USD had a muted reaction and continued to trade firmly below the psychologically important 1.6600 level.
Later today at 14:00 GMT, attention will turn to August’s US ISM Manufacturing data. The data is expected to reveal that US manufacturing sector expanded at 57.0 from a three-year high of 57.1 in the previous month. Moreover, later in the week, traders’ focus will turn to the high profile Bank of England Rate Decision that is scheduled to be released at 11:45 GMT on Thursday. The BoE is expected to leave rates unchanged at 0.50 percent, which was held since February 2009. This is on the backdrop of last month’s BoE Minutes that revealed an interest rate vote of 7-2 from 7-0 in the prior count by the MPC members.
In regards to technical analysis,Ilya Spivak mentions near-term support to 1.6533 (38.2% Fib Exp.) and resistance at 1.6613 (trend line resistance). He remains flat for now as he argues against entering short with prices trading in close proximity to support level and there is an absence of a defined bullish reversal signal.Meanwhile according to DailyFX Speculative Sentiment Index, the ratio of long to short positions in the GBP/USD stands at 1.43 as 59 percent of traders are long.
GBP/USD 5 Minute Chart
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Edward Hyon, DailyFX Research Team
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