GBP/USD – Pound Under Pressure after Soft PMIs

GBP/USD is steady at the start of the week. It could be a volatile week, after the killing of an Iranian general by the U.S. on Friday.
Kenny Fisher
GBP/CAD Last Line of Defense for Bulls

GBP/USD started last week with gains, but gave these up after losing ground late in the week. Currently, the pair is trading at 1.3083, up 0.05% on the day.

PMIs Point to Contraction

Key sectors of the British economy remain in contraction, according to December’s PMI releases. On Thursday, Final Manufacturing PMI, slowed to 47.5, down from 48.9 a month earlier. The PMI has not pointed to expansion (a reading above the 50-level) since April, as the manufacturing sector remains in decline. There was no relief from Construction PMI on Friday. The index slipped from 45.3 to 44.4, shy of the estimate of 45.8 pts. We’ll get a look at Services PMI later on Monday with the index expected in at 49.1 pts.

The pound is struggling to remain above the symbolic 1.30 level, and a weak Services PMI could sour investor sentiment towards the currency and push it to lower ground.

Technical Analysis

GBP/USD tested resistance at 1.3150 on Friday but has retracted. On the downside, 1.3050 is an immediate support line, which could be tested early in the week. Below, there is support at 1.30, which has psychological significance.

GBP/USD 1-Day Chart

 

Pacific Currencies – Daily Summary

USD/CNY

USD/CNY has started the new week on a positive note. Currently, the pair is trading at 6.9763, up 0.18% on the day. The pair moved higher after Chinese Caixin Services PMI slowed in December. The index dropped from 53.5 to 52.5, falling short of the forecast of 53.2 pts.

AUD/USD

AUD/USD dropped 0.60% on Friday, its biggest one-day loss since mid-November. This was a result of a loss in risk appetite due to the U.S. airstrike which killed an Iranian general. Currently, AUD/USD is trading at 0.6947, down 0.01% on the day. In economic news, Commodity Prices recorded a decline for a third successive month, coming in at -2.1% in December. The AIG Manufacturing Index came in at 48.3, pointing to contraction in the manufacturing sector.

NZD/USD

After losing ground over the past two sessions, NZD/USD is steady on Monday. Currently, NZD/USD is trading at 0.6657, down 0.07% on the day. There are no New Zealand releases on Monday.

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