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GBP/USD – Pound Yawns as Construction PMI Improves

By:
Kenny Fisher
Updated: Feb 6, 2020, 08:01 UTC

The pound has settled down and is trading slightly above the 1.30 level. British PMIs have looked good in January, as the manufacturing and construction PMIs have both accelerated.

GBP/USD Price Forecast - British Pound Breaks Down
GBP/USD is trading sideways on Wednesday. The pair is currently trading at 1.3032, up 0.02% on the day.

Construction PMI Improves

The pound started the week on a sour note, falling 1.4% after Prime Minister Johnson and EU chief negotiator Michel Barnier clashed over a new free trade deal between the U.K. and the European Union. The political tensions overshadowed some positive news from British PMIs for January. On Monday, Manufacturing PMI improved to 50.0 in January, up from 47.5 a month earlier. This marked the first time that the index has not been in negative territory since April. On Tuesday, Construction PMI also showed improvement, climbing to 48.4, above the forecast of 48.1 points. This marked the highest reading since May, although the index still indicated a decline in construction. On Thursday, the U.K. releases Services PMI, which is expected to show slight expansion, with a forecast of 52.9 points.

Technical Analysis

The 1.30 line remains relevant this week. Currently, this key level is a weak support level and could be tested at any time. Below, there is support at 1.2902, followed by a support level at 1.2850. On the upside, we find resistance at 1.3075.

Pacific Currencies – Daily Summary

USD/CNY

The Chinese yuan has been very busy this week, but has taken a pause on Wednesday. Currently, the pair is trading at 6.998, up 0.02% on the day. The pair is hovering around the symbolic 7.00 level, after starting the week with sharp gains. In economic news, Caixin Services PMI slowed to 51.8 in January, down from 52.5 a month earlier. This figure was slightly off the forecast of 52.0 points.

AUD/USD

After a nasty slide, AUD/USD reversed directions on Tuesday, posting its best one-day gains in three weeks. Currently, the pair is trading at 0.6736, up 0.08% on the day. The AIG Construction Index improved to 41.3 in January, up from 38.9 a month earlier. Still, this points to deep contraction in the troubled construction sector. On Thursday, Australia releases retail sales, which is expected to decline by 0.2%, as well as Trade Balance.

NZD/USD

NZD/USD is currently trading at 0.6483, down 0.08% on the day.  The currency shrugged after New Zealand posted mixed employment data. Employment change, came in at 0.0% in Q4, down from 0.3% in the previous quarter. Analysts had projected an estimate of 0.3%. The unemployment rate fell to 4.0%, down from 4.2% in the previous release. The reading was better than the estimate of 4.2%.

About the Author

Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.

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