Forex: GBP/USD closes in on 2½ year high but retreats on negative UK Manufacturing PMI

on Jan 2, 2014
Updated: Oct 21, 2019
Listen Thursday, January 2nd:_ The GBP/USD earlier today reached its highest point since 19 August 2011 at 1.6602. Since then the pair has been flinching under the resistance exerted by the 1.6600 psychological level, to be currently trading at 1.6541 after logging an intraday low at 1.6534.

The downtick has also been supported by the reported contraction in the Markit/CIPS UK Manufacturing Purchasing Managers Index for December, down to 57.3 from the 58.1 in November which was the highest point gained in the past 33 months.
Notwithstanding December’s easing, CIPS CEO David Noble believes that “UK manufacturing ended 2013 on a high and with all signs of powering ahead into 2014”. Rates of production and new order growth “remained well above the long-run survey average, rounding off the best overall quarterly performance for the PMI since Q1 2011”.

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Noble notes that ”the sector’s broad based expansion was underpinned by strong domestic demand and improved export orders, all of which are signs of an underlying trend of continuing growth going into the New Year”, which “resulted in increased levels of employment in the manufacturing sector for the eighth consecutive month”. Rising inputs buying, observes Noble, “is putting a distinct pressure on suppliers and on delivery times” with attendant pressure on input cost pricing and “input price inflation hitting a 28-month high”.

In the United States today Unemployment Insurance Initial Claims is due out at 13.30 UTC. Analysts’ expectations are for a drop to 334,000 in last week from the prior 338,000.
The Markit Final US Manufacturing PMI follows at 14.00 UTC and is forecast to remain at 54.4 in December.
The official US Manufacturing PMI as compiled by the Institute for Supply Management is then due at 15.00 UTC, with expectations for a drop to 56.8 in December from 57.3.
Levels of resistance today: 1.6595/600, 1.6635 and 1.6675.
Levels of support: 1.6550, 1.6500 and 1.6465.


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