Pound widens losses after lower than forecast manufacturing figures

Pound widens losses after lower than forecast manufacturing figuresThe pound widened its losses versus the U.S. dollar on Monday after U.K. manufacturing sector activity data missed analysts’ forecasts.

The Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) inched up 52.0 in May from 51.9 in April, the lowest in seven months, missing forecasts of 52.7.

Investors are carefully watching indicators for the second quarter, after the ease in first-quarter growth to 0.3 percent.

The BOE forecast the U.K. to expand 2.5 percent this year, compared to a robust 2.8 percent in 2014.

Later in the week, eyes will focus on PMI services for May and the BOE monetary policy decision.

All panel members agreed that it was more likely that the record-low interest rate would not go up over the three-year forecast period, BOE minutes for April policy meeting signaled.

The dollar remained vigorous against majors for a third straight week, as now investors are sure an interest rate hike would occur this year and not in 2016.

Fed Chairwoman Janet Yellen has mentioned the Fed will raise interest rates this year if the economy shows improvement.

GBPUSD Pair

The GBPUSD resumed its drop a seventh straight session on Monday, after losing 2.85 percent the previous two weeks.

As of 09:15 GMT, the pound traded around 1.5215 against the green currency, after setting a low of 1.5211.

The breach of the support line, depicted on the daily chart, has triggered a sell-off in the pound, where further losses may occur as the RSI 14 momentum indicator dipped below the 50-center line.

The pair is currently trading below this week’s pivot point located at 1.5342, where it may wobble between key support at 1.4800 and key resistance at 1.5885.

GBPUSD fxcomment June 1

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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