Talking Points:
- EUR/GBP, GBP/CHF post important reversals at recent extremes.
- GBP/USD uptrend since mid-June breaking.
- See the DailyFX Economic Calendar for Tuesday, July 8, 2014.
The British economy heated up at the end of the second quarter, setting the stage for a promising second half of 2014 as well as fervent speculation about the timing of the first Bank of England interest rate hike in the post-global financial crisis, post-Euro-Zone debt crisis era. Private sector growth tracking estimators suggest that UK GDP is on its way to new all-time highs this year. There’s no surprise then why the British Pound has been on such a tear in 2014.
The June UK PMI reports were promising across each the construction, manufacturing, and services sectors, in aggregate pointing to quarterly growth continuing in the +0.7%-+0.9% range in and through the second and third quarters. Individually, each survey reported the best Employment gauges in the 17 year history of the Markit PMI surveys, an indication that the consumption-based British economy is on a firm footing over the medium-term.
Our medium-term assessment for continued economic strength is further underscored by the New Orders component in the three recent PMI sector reports, which were at six-month highs. We highlight these more recent data figures to put in context the quite disappointing May UK Industrial and Manufacturing Production reports from this morning.
See the video above for the short-term technical implications of the weak UK data on EUR/GBP, GBP/CHF, and GBP/USD, as the GBP-crosses form short-term reverals and traders are faced with the question: do I sell the highs or wait to buy the dips?