The Great Britain continued to slide against the US dollar in last weeks trading session after disappointing data from the manufacturing sector was published on Friday. Markit Economics reported earlier that its U.K. manufacturing purchasing managers’ index fell to 55.4 last month, down from 57.5 in June. Analysts had expected the index to slip to 57.2 in July, and numbers weakened the pound. A day earlier on Thursday, the Nationwide Building Society reported that property values rose 0.1% in July from June, missing market calls for a 0.5% reading, which softened the pound. While many market watchers expect the Bank of England to tighten policy before most other central banks, Friday’s data sent investors rethinking their timelines, which gave the dollar the edge over its U.K. counterpart despite disappointing jobs numbers out of the U.S.
Elsewhere, the U.S economy showed some improvement after data released earlier in the week showed an improved Advance GDP, after clearly beating economist forecast of 3.1% to 4.0%. The Feds also stated that improvement is expected to continue during the last Central Bank Statement and a 10 billion US dollars is to be trimmed from the on going bond purchasing program. However, the Feds stated there is still slackness in the Labor sector which could slow things a little bit down. This however proved itself after the Labor Department reported earlier that the U.S. economy added 209,000 jobs in July, missing expectations for an increase of 233,000. The number of jobs added in June was revised up to a 298,000 gain from a previously estimated rise of 288,000. The report also showed that the U.S. unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the rate to remain unchanged in July.
Also there was no hint about when to expect the rate hike investors have been monitoring. Separately in the U.S., the Institute of Supply Management reported that the U.S. manufacturing purchasing managers’ index rose to 57.1 in July from 55.3 in June, beating expectations for an increase to 56.0.
Technically weekly bias in the pair remains on the downside as 21 and 55 EMA’s is still pointing southwards with MACD, RSI and SSRC also showing more decline is expected on the 4 hours and Daily time-frames. More supply to 1.66917 is expected but caution should be applied as we may see a mild retracement before the sell-offs. A good trading strategy that can be applied is selling the rips, this means looking for selling opportunities whenever we see a mini buy trend in the pair using price actions like Pin-bars, engulfing patterns formed on supply zones or resistance levels etc.
Key Economic indicators to watch out for in the coming week are GBP Construction PMI, Services PMI, Manufacturing Production, MPC Rate Statement/Interest Rate, Manufacturing Production. From the US economy we will be monitoring Trade Balance, ISM Non-Manufacturing PMI and Unemployment Claims.