The strength of the US dollar found a vulnerable pound, especially after a second PMI upset.
The previous break under 1.50 was just for stop hunting’s sake, and this time we may be witnessing the real thing.
The British construction sector is also slowing down. This used to be the stronger sector in the UK economy. Yesterday’s manufacturing PMI clarified that the rise seen in October was only a one-off in the UK’s weakest link. Tomorrow we have the most important sector: services.
See how to trade the services PMI with GBP/USD.
The strength of the US dollar comes from one upbeat figure and one hawkish talk from the Fed. ADP NFP beat expectations with a gain of 217K private sector jobs in November, and an upwards revision.
The Fed’s Denis Lockhart leans towards the hawkish side, so his bullishness was not surprising. However, he made it seem like it’s a done deal by saying that it’s going to be a historic event.
The low so far has been 1.4950, which also worked as support in the past. There isn’t much support between this line and 1.48, which is the level that accompanied Mark Carney’s first days at the BOE.
