The British currency experienced mixed performance on Monday, having appreciated against some major peers, but declined against the others. The Sterling gained the most against the US Dollar, amid a poor reading of the US Manufacturing PMI, followed by a 0.34% rally versus the Yen and 0.24% against the Loonie. Meanwhile, losses of 0.37% and 0.31% were registered against the Aussie and the Euro, respectively, while the Pound edged 0.18% lower against the Kiwi and 0.16% versus the Swiss Franc over the past 24 hours.
The US manufacturing sector expanded at a more moderate pace in April, partly due to a slowdown in new orders, but an increase in export orders to the highest level in more than a year offered hope for the sector. The Institute for Supply Management reported its index of factory activity slid to 50.8 last month, down from 51.8 in March. Despite the decline, April marked the second consecutive month of expansion and was the second highest reading in the last eight months. The US manufacturing sector has been struggling due to a strong US Dollar and moribund global demand. In addition to that, lower oil prices have derailed manufacturers tied to the energy industry.
Separately, the Commerce Department reported construction spending rose 0.3% in March to its highest level since October 2007, following an upwardly revised 1.0% gain in February. The US economic growth slowed to a 0.5% annualized rate in the first three months of the year. The revised February construction spending figures appeared to be much higher those used in the advance first-quarter GDP estimate. Economists predict GDP growth for the first three months of the year will be revised up to a 0.7% rate. Given a fairly strong labour market, which is anticipated to underpin tepid consumer spending, economists expect gross domestic product growth to rebound in the second quarter.
UK Manufacturing PMI
GBP/USD takes another shot at retaking 1.47
On Monday the Sterling managed to prolong its bullish momentum and post rather solid gains against the US Dollar. The Cable's upside volatility was limited by the 1.47 major level yesterday, which could prevent the pair from edging higher today as well. The nearest resistance is still represented by the weekly R1 and the Bollinger band around 1.4740, while the weekly PP represents immediate support at 1.4563. According to technical indicators, the GBP/USD currency pair is to continue appreciating over the day, but poor UK data could cause the exchange rate to return towards the 1.46 mark.
Daily chart
Hourly chart
Sentiment at perfect equilibrium
Bears keep outnumbering the bulls by four percentage points. Meanwhile, the portion of orders to purchase the Pound increased from 44 to 51%.
At OANDA market sentiment broke out of a perfect equilibrium today, with only 55% of their open positions being long. Meanwhile, the sentiment at SAXO Bank remains bearish, with 58% of their traders holding short positions (previously 55%).
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.44 in three months