The British pound has declined recently against most major currencies, including the US dollar. There were few important economic releases lined up during this week, which ignited a move lower in the pair.
The most important ones include industrial production data, manufacturing production data and NIESR GDP estimate. There were few releases, which were encouraging but failed to push the pair higher, including the UK construction PMI and services PMI. The GBPUSD pair has mostly traded in a range of 40-60 pips, but the downside pressure is more compared to the bullish momentum.
UK Construction PMI
The first in line was the UK construction PMI. The forecast was of a decline from 62.6 to 62.0. However, the outcome exceeded the expectation, as the UK construction PMI came in at 62.4. The report mentioned that the latest expansion of overall construction activity was one of the fastest seen since the summer of 2007. The GBPUSD pair managed to gain some bids after the event.
UK Services PMI
The next major release this week in the UK was services PMI, which was released by the Chartered Institute of Purchasing & Supply and the Markit Economics. The forecast was of a rise from 57.7 to 57.9. The outcome exceeded the expectation, as the UK services PMI came in at 59.1, which is an eight-month higher in the index. The report mentioned that the launch of new services, increased marketing and greater opportunities to tender for business were all noted as factors underpinning growth of activity.
The GBPUSD pair blasted higher to trade towards the 1.6880 level, but it failed to break the same. So, despite solid services PMI the pair failed to gather bids around the resistance zone.
UK Industrial and Manufacturing Production Data
Probably, one of the main factors which took the GBPUSD pair lower was the UK industrial and manufacturing production data, which was published on Wednesday by the National Statistics. The Forecast was of a rise in the UK manufacturing production by 0.6%. However, the outcome was disappointing, as it managed only 0.3% growth rate. Similarly, the UK industrial production missed the forecast of a 0.6% rise and registered a reading of 0.3%.
This did not go down well with the British pound buyers, as the pair traded lower back towards the 1.6830-20 support level. The pair did manage to find buyers around the mentioned area, but it remained under the bearish pressure.
Technically, the 1.6800 support area holds a lot of importance for the pair. If the pair manages to hold it, then there is a chance that it might trade higher in the coming sessions. Alternatively, if sellers manage to break it, then a move towards the 1.6760-50 is possible in the near term. Today, we have the UK trade balance release lined up, which might act as a catalyst for the pair moving ahead.
So, keep an eye on all the important levels friends and trade accordingly.
Guest post by Vladimir Ribakov
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