Investors Eye PMI Reports
After a pause for New Year’s, investor focus is on the British PMI releases for December, which are important gauges of key sectors in the economy. Later on Thursday, we’ll get a look at Final Manufacturing PMI, which is expected in at 47.6 pts. This is slightly higher than the initial reading of 47.4, but nonetheless points to contraction. This will be followed by Construction PMI on Friday and Services PMI on Monday. Both releases are projected to indicate contraction, with estimates below the 50-level.
Roller Coaster December for Cable
The pound showed strong volatility in December, a microcosm for the pound’s fortunes in 2019. GBP/USD fell as low as 1.1958 in early September, as Brexit caused plenty of political drama in the British parliament. Only three months later, the pound soared above the 1.35 level, as the markets were elated with Boris Johnson’s surprisingly easy election win. This has paved the way for a Brexit departure at the end of January. However, traders should be prepared for more swings from the pound early in 2020, as the transition period after Brexit promises to be uneasy and difficult. Already London and Brussels are arguing whether 11 months is enough time to conclude a new trade deal- the EU wants more time, but Prime Minister Johnson wants out of the EU as soon as possible.
GBP/USD is currently range-bound. On the upside, there is resistance at 1.3280. The pair is putting downward pressure on 1.3200. Below, we find support at 1.3150.