GBP/USD has punched above the 1.3000 line on Wednesday, after posting considerable gains on Tuesday. In European trade, GBP/USD is trading at 1.2995, up 0.01% on the day. The pound had a good day on Tuesday, posting its best one-day gain since mid-October.
PMIs Point to Contraction in UK Economy
PMI reports are important gauges of the health of key sectors in the economy. The week started with data from the manufacturing and construction industries. Although both the Manufacturing PMI and Construction PMI managed to beat their forecasts in November, both remain mired below the 50-level, which points to contraction. Neither PMI has shown an expansion reading (above the 50-level) since April, which is indicative of a struggling British economy. No relief is expected from Services PMI, which will be released later on Wednesday. The index managed to touch 50.00 in October, but is expected to dip to 48.6 in the upcoming release. A lower reading than expected could send the pound to lower ground.
Ahead – U.S. PMI, ADP Nonfarm Payrolls
We could see some movement from GBP/USD in the North American session, with two key events out of the United States. The ISM Non-Manufacturing PMI came in at 54.7 in October, and little change is forecast for November, with an estimate of 54.5. This points to respectable expansion in the services sector. Later, this week’s key employment releases kick off with ADP Nonfarm Payrolls, which is expected to climb to 137 thousand, up from 125 thousand a month earlier.
GBP/USD is currently trading just above the 1.3000 level, which has psychological significance. The pair can put some more distance above this line, it has room to move deep into 1.33 territory. On the downside, 1.2925 is providing support.
Pacific Currencies – Summary
USD/CNY continues to move higher this week. Currently, the pair is trading at 7.0694, up 0.12%. The pair is at its highest level since October 23, as the yuan is showing signs of weakness against the U.S. dollar. The yuan dropped on Tuesday, despite a strong reading from Caixin Services PMI. The index rose to 53.3 in November, its highest level since April.
AUD/USD is trading at 0.6820, down 0.43% on the day. The pair coughed up Tuesday’s gains after GDP for the third quarter dipped to 0.4%, down from 0.5% in Q2. This figure was shy of the forecast of 0.5%. On Thursday, Australia releases retail sales and trade balance.
NZD/USD has posted small losses on Wednesday. Currently, the pair is trading at 0.6508, down 0.16% on the day. The pair failed to take advantage of an excellent reading from ANZ Commodity Prices, which jumped 4.3%. This marked its best gain since September 2016.
This article was originally posted on FX Empire
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