Sterling Strengthens Against Greenback Post UK PMI Data

The British Pound strengthened against the Greenback, following the UK Construction PMI data release on Wednesday. The Markit released Construction Purchasing Managers’ Index that came out better-than-expected of 52.5, compared to the 47.0 in the previous period, at the same time reversing the industry’s contraction to expansion. Analysts believe that the rebound in construction activity was inevitable after snowfall resulted in severe disruptions on site during March.

GBPUSD In a Tizzy

GBP/USD is currently moving range bound on a weaker dollar and US yields after a pretty monotonous outcome from the FOMC two day meeting and interest rate decision from the Fed. While the Fed’s noted the weakness in economy, they were confident that inflation will meet their target shortly, however a lack of direct confirmation in any form for rate hikes in June caused disappointment to traders that hurt dollar’s uptrend momentum.

Similar to USD, Sterling also has its own owes, that being expectations of rate hike from the BoE on the 10th of May. UK data of late has been poor and this week’s PMIs have been under big scrutiny. Yesterday’s construction outcome was an improvement but today’s services PMI is likely to garner more attention from the market. The service PMI data is scheduled to be released at 0830 GMT and is expected to lift from 51.7 to 53.5, the outcome of this data on positive note will help the strengthened GBP to try a bullish breakout while a disappointing data will give USD further bullish momentum.

On US side, things to look out for during today’s session are Trade balance, export & import data, Non-Farm productivity, composite & service PMI readings and also ISM non-manufacturing employment and PMI data. While US market has seen mixed economic readings so far this week, a positive outcome for above mentioned economic parameters will help US dollar gain another steep bull momentum in remaining trading sessions for the week. Expected support and resistance values are at 1.3552 and 1.3665 respectively.