GBP/USD broke to a 16 month high, but could be getting cold feet on this breakout. The fiscal cliff solution, albeit temporary, pushed the pair higher, and British manufacturing PMI should have helped it cement the gains. This isn’t happening yet.
The first economic indicator released in 2013 came out better than expected: British manufacturing PMI climbed from 49.2 points (after a revision) to 51.4 points. This exceeded predictions of no change at 49.2 points. It also reflects a shift from contraction to growth: the 50 point mark separates the two.
Nevertheless, after the initial euphoria from the fiscal cliff approval in the House, the positive PMI didn’t help the pair from retreating. Cable is now trading at 1.6291, under the all-important 1.63 line, and way below the new peak of 1.6381 seen in the early hours.
Cable is now back in the wide 1.60-1.63 range. Have we seen another false break? For more on the pound, see the GBPUSD forecast.
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