UK Manuf PMI Beats Expectations, Sterling Indecisive
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Sterling Traders' Real Focus is on UK Services and US Non-Farm Payroll
UK manufacturing PMI for March beat expectations but the outlook for the sector remains unclear. IHS Markit data showed manufacturing hitting 55.1, beating expectations of 54.7 and a prior revised month of 55.0.
According to Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply: “After the mini-boom of productivity at the end of last year, the sector still held its own, delivering a steady if unremarkable performance with overall activity improving very modestly from last month.”
GBPUSD moved higher on the release but gains were soon pared as traders look ahead to important data points later in the week. In the UK the IHS Markit services release – April 5 at 08:30 GMT - will be closely watched while on Friday at 12:30 GMT, the monthly US non-farm payrolls release will give us more information on the state of the US economy.
DailyFX analysts Chris Vecchio and Michael Boutros will be covering the NFP release on Friday from 12:15 GMT.
GBPUSD Price Chart One Minute Time Frame (April 3, 2018)
Client Positioning Hints at Lower Prices
The latest IG Retail Positioning Data show Retail trader 48.6% of traders are net-long with the ratio of traders short to long at 1.06 to 1. In fact, traders have remained net-short since Mar 21 when GBPUSD traded near 1.40037; price has moved 0.5% higher since then. The number of traders net-long is 13.5% higher than yesterday and 30.2% higher from last week, while the number of traders net-short is 3.8% higher than yesterday and 20.8% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
--- Written by Justin McQueen, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.