GBP/USD Jolts Above 1.6200 As UK Construction PMI Hits A 9-Months High
- UK Construction PMI (Sep): 64.2 Actual Vs 63.5 Estimated; 64.0 Prior.
- Dollar Breaks Pace on the Same Day Risks Slumps.
- GBP/USD Bounced to Trade Above 1.6200 after UK Construction PMI.
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According to Markit, the UK Construction PMI came in at 64.2 in September and edged higher compared to the prior month. The data was also above market expectations of 63.5, which was the highest reading in 9-months. It seems the construction sector in the UK seems to be aligned with the better-than-expected 2Q GDP (QoQ) figure.
Before the release of the construction PMI figure, the British Pound grinded higher against the US Dollar to oscillate above and below the 1.6200 level. Most of the fuel came from the weaker US Dollar across the board, despite BoE member Kristin Forbes’ suggesting that the currency’s level could be masking inflation. Immediately after the data release, GBP/USD jolted to trade above the psychologically significant 1.6200 level.
For the remainder of the week, GBP/USD will respond to the imperative September’s USD Change in Non-Farm Payrolls and Unemployment Rate data, which is due at 12:30 GMT on Friday. Yesterday’s USD ADP Employment Change, an indicator showing an early look at employment growth, came in at 213,000 for the month of September versus 202,000 in August. The report exceeded estimates of 207,000. Any strong number that beats estimated figures will likely bode-well for the US Dollar and may be the catalyst to fuel further gains for the benchmark currency since September 2008, at the height of the financial crisis.
For those Forex traders that respects technical breakdown, DailyFX Currency Strategist Ilya Spivak mentions near-term support to rest at 1.6088 (38.2 percent Fibonacci Expansion) and resistance at 1.6255 (23.6 percent Fibonacci Expansion). He is short the cable at 1.6233, initially targeting 1.6088. Meanwhile according to DailyFX Speculative Sentiment Index, the ratio of long to short positions in the GBP/USD stands at -1.05 as 49 percent of traders are long.
GBP/USD 5 Minute Chart
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Edward Hyon, DailyFX Research Team
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