NEW YORK (Forex News Now) – In currency market trading seen so far this week, GBP/USD gapped lower at the weekly open as the U.K. observed its New Year’s Day Bank Holiday. The rate subsequently traded as far down as 1.5432 during Monday’s somewhat thinned trading session, perhaps spurred by better than expected results for U.S. Construction Spending that rose +0.4% for the month (+0.2% expected), combined with news that U.S. ISM Manufacturing Prices also improved to 72.5 versus the 71.2 consensus.
Cable then rose sharply to fill that gap on Tuesday, hitting its current weekly high of 1.5645 after U.K. Manufacturing PMI came out at a positive 58.3 versus the expected 57.3. This was the highest level seen in over five years, although the previous month’s number was revised down from 58 to 57.5, which neutralized the effect somewhat.
Tuesday also saw the release of U.K. Net Lending to individuals that came out below consensus at £0.7B compared with the £0.9B anticipated, although the revision to the previous month’s number from £1.3B to £1.5B made up for the shortfall to yield a net neutral result for Cable. Also, U.K. Chancellor George Osborne stated that his government does not plan on additional tax rises, and this was taken as positive fx trading news for the Pound.
U.K. Construction PMI was the highlight of today’s early session, coming out considerably below last month’s 51.8 result at the disappointing 49.1 level versus the 51.1 consensus. GBP/USD also suffered later in the day from an extraordinary rise in the U.S. ADP Non-Farm Employment Change to +297K. This was far better than the expected number of +101K and the previous +92K print. Cable also suffered from a favorable U.S. ISM Non-Manufacturing PMI result that rose 57.1 compared with the 55.6 result anticipated.
Outlook for GBP/USD This Week
Looking forward for the U.K. economic calendar this week, Thursday’s session will feature the release of Services PMI, with current expectations centered on 52.9, as well as the Credit Conditions Survey from the BOE.
Friday or Saturday may then see the release of the important U.K. Halifax HPI that is expected to drop -0.3% for the month compared with the -0.1% fall seen last month. Of course, Friday’s key U.S. Non Farm Payrolls number could also yield some volatility for GBP/USD, especially if the result differs significantly from the +136K consensus.
The hourly technical intraday analysis picture is more bullish for Cable this week, but the many overlaps indicate largely corrective price action with an overall upside bias that could soon be reversed. Furthermore, a break below GBP/USD’s rising 200-day Moving Average that is now at 1.5412 could well accelerate the downside.