What’s Pushing The British Pound Lower?

The British pound moved lower against most of its counterparts during this past week, including the US dollar, the Euro and the Australian dollar. The Euro was the biggest gainer against the British pound. The recent economic data missed the expectation, and as a result it gave a reason to the British pound sellers. The GBPUSD pair also moved lower and broke an important support area at 1.6910 level, which paved the way for more losses in the pair. The first release which encouraged the British pound sellers was the UK Gfk consumer confidence. The forecast was slated for a rise from 1 to 2, but outcome missed the expectation. The next in line was the UK manufacturing PMI, which came in at 55.4 from 57.5.


UK Construction PMI

The GBPUSD pair looks like stabilizing around the 1.6820-30 level and consolidating in a range. The UK construction PMI was also released earlier during the London session today by the Chartered Institute of Purchasing & Supply and Markit Economics. The forecast was slated for a decline from 62.6 to 62.0. However, the outcome was a bit on the positive side, as the UK construction PMI climbed to 62.4. The report mentioned that there was strong output growth across the UK construction sector during July, and housing activity remained by far the best performing construction category. One of the highlights of the report was that the job creation across the construction sector was the fastest in the last 15 years.




However, all these events can only impact in the short term. There is a major risk event lined up later during this week i.e. the Bank of England interest rate decision on Thursday. There is no change expected in rates, so it is likely that the pair might gain some traction.

Technically, the GBPUSD pair traded a touch higher during the London session, and traded close to the 1.6850 level as of writing. It is important to note that the mentioned level acted as a support earlier, and might act as a resistance moving ahead. On the downside, the 1.6810-00 is a major support area for the pair, and it must hold if the pair has to continue trading higher in the coming days. A break and close below the mentioned area might call for more losses towards the 1.6720 level. On the upside, the most important resistance lies around the 1.6910 level.