GBP/USD better bid, but capped by 1.2500 ahead of UK PMI

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GBP/USD better bid, but capped by 1.2500 ahead of UK PMI

The GBP/USD pair is seen on a steady recovery path so far this session, with the bulls now trying hard to regain 1.25 handle amid moderate risk-aversion.

Cable peeks into the green amid subdued treasury yields, in the wake of lack-luster US manufacturing PMI reports released a day before. However, the recovery gains appear capped amid negative equities, as risk-off extends into Asia.

Moreover, the sentiment around the pound remains somewhat undermined, as yesterday’s poor UK manufacturing PMI report continues to weigh. The UK manufacturing PMI for March arrived at 54.2 versus 55.1 expectations and 54.6 last.

Focus now shifts towards the UK construction PMI data due later in the European session for fresh impetus on the spot. Also, the US trade and factory orders data will be closely eyed for next direction on the buck.

GBP/USD Levels to consider            

Valeria Bednarik, Chief Analyst at FXStreet notes, “The 4 hours chart supports additional declines, as the price is currently developing below its 20 SMA, whilst the Momentum indicator is crossing below the 100 level, and the RSI heading south around 46. Still the pair has a major support around 1.2430, which stands for the 38.2% retracement of the January rally. A break below this last should expose March 29th low of 1.2375, en route to 1.2330 a strong static support. The upside should remain capped by selling interest around 1.2540/60 for the bearish trend to remain in place.”

GBP/USD eyes key fibo support at 1.2430

Currently, GBP/USD is trading at 1.2474, down -0.60% on the day, having posted a daily high at 1.2557 and low at 1.2466.

GBP/USD has been hit hard today, starting overnight on the back of UK Markit manufacturing PMI for March that sent sterling traders offloading cable below the 1.25 handle. The data arrived in at 54.2 for a four-month low. This was vs. the prior 56.2 and missing expectations of 55.1. The ISM manufacturing in the US was positive although markit manufacturing PMI was missing expectations by 0.2%. The key events for the week http://humanrightsfilmnetwork.org/cialis will come in the form of the FOMC minutes and the nonfarm payrolls at the end of the week:

GBP/USD levels

To the downside, there is the major 1.2430 Fibonacci support and Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart supports additional declines, as the price is currently developing below its 20 SMA, whilst the Momentum indicator is crossing below the 100 level, and the RSI heading south around 46. “The upside should remain capped by selling interest around 1.2540/60 for the bearish trend to remain in place.”

Bullish bets on EUR continue to rise, USD longs trimmed – Rabobank

Research Team at Rabobank lists down the IMM net speculators’ positioning as at 28 March, 2017.

Key Quotes

“Rapidly fading concerns about political risks in Europe and an encouraging set of Eurozone data led to a further sharp fall in bearish bets against the euro. Net EUR shorts plunged to just 7.9k as of March 28 from an already low 19.7k in the previous week. Following the favourable market outcome of the Dutch general election, investors increased their long EUR positions to the highest level so far this year. With opinion polls consistently showing that anti-EU Marine Le Pen is unlikely to win the presidential election in France, the euro appreciated against the US dollar to a year-to-date high at 1.0906 in the second half of March before trimming its gains.”

The health bill debacle on Capitol Hill raised market concerns about the prospects for crucial tax cuts, infrastructure projects and deregulation. Consequently, net USD longs have been trimmed to 44.21k – the lowest since the start of the year. For the DXY Index to regain upside momentum the Trump administration would have to reveal concrete details regarding its fiscal measures. Upbeat tweets from the White House fully of pledges to generate more jobs are not sufficient at this stage to reignite the bullish momentum in the US dollar. Comments following a meeting between US President Trump and Chinese President Xi on Friday may also set the tone for the markets.”

Net GBP shorts increased sharply before Prime Minister May sent a letter to European Council President Tusk to officially inform that the UK intends to leave the EU. While sterling actually appreciated last week on the back of short-covering pressures, we maintain our bearish view, particularly against the euro, as uncertainty regarding the final Brexit deal is set to prevail.”

Following the failure of the Trump administration to repeal and replace Obamacare USD/JPY plunged to the lowest level so far this year in the second half of March in line with a fall in net short positions.”

“The sharp move lower in USD/CAD on March 15 was followed by a consolidation in the second half of the month. That said, there was a shift in market positioning from a modest net long positions to shorts to reflect bearish views on the US dollar.”