GBP/USD slides after impressive US employment and car sales data
- The GBP/USD pair dropped today as traders reacted to impressive economic data from the United States.
- Data from ADP showed that the private sector in the US added more than 428k jobs.
- Another data showed that all car sales in the US rose to more than 3.56 million in August.
The GBP/USD pair is down by more than 0.30% as investors react to the likelihood of a V-shaped recovery in the United States. It is trading at 1.3345, which is lower than yesterday’s high of 1.3485.
US dollar gains after strong employment change data
The likelihood of a V-shaped recovery in the United States is increasing according to the latest economic data. Yesterday, data from Markit and ISM showed that manufacturing PMI increased to 53.1 and 56.0, respectively. The increase in manufacturing activity happened even as the number of coronavirus cases in the US continued to rise.
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And today, data from ADP Research Institute showed that the economy added more than 428,000 jobs in August. That was higher than the 212K jobs that were created in the previous month. Nonetheless, the data was weaker than the 950k that analysts were expecting.
According to ADP, large companies with more than 500 employees created more than 298,000 jobs while midsize firms created 79,000 jobs. Small businesses with less than 50 employees created more than 52,000 jobs. Broadly, the services sector created more than 389,000 jobs while the goods-producing sector added 40,000 jobs.
These numbers offered a glimpse of what will happen on Friday, when the Labour Department releases the official numbers. Analysts polled by Reuters expect that the economy added more than 1.4 million jobs in August. They also expect the unemployment rate will fall to 9.8% while average hourly earnings will rise by 4.5%.
Meanwhile, another data released today showed that there were more than 3.56 million total car sales in the US in August. That was higher than the 3.5 million that were sold in July. All truck sales rose to 11.3 million.
UK data also impressive
The GBP/USD pair is falling even after impressive data from the UK. Earlier today, data from the Nationwide Society showed that the house price index increased by 3.7% in August. That was higher than the 2.0% that analysts were expecting and the previous month’s 1.5%. The prices rose by 2.0% on a month-on-month basis, the highest level since 2004.
There were some positive data from the UK yesterday. Data from Markit showed that the manufacturing PMI increased to 55.2 in August from the previous month’s 53.3. Another data from the Bank of England showed that mortgage approvals increased by 66.30k in August. The value of mortgage approvals rose to more than £2.70 billion from the previous £2.39 billion.
Later today, the GBP/USD pair will react to factory order data from the US and the Fed’s beige book.
GBP/USD technical analysis
The daily chart shows that the GBP/USD pair has been in a strong upward trend in the past few months. It is now trading at 1.3350, which is slightly lower than yesterday’s high of 1.3485. The price remains above the 50-day and 100-day exponential moving averages. It is also slightly above the important support at 1.3200. Therefore, I suspect that the price will likely continue to fall as bears attempt to test the next support level at 1.3300.