Article by ForexTime

Sterling is under pressure despite the strong construction PMI figure out of the U.K, as the greenback gains strength against most major currencies. The weakness is being blamed in markets on Scotland’s independence referendum, which will take place on Sep-18. Polls suggest that the Scotland will remain in the Union, though it’s sufficiently close call to keep the currency markets on edge. The benign inflation picture and the sharp drop in the August manufacturing PMI will also leave the dovish majority at the BoE’s MPC in the ascendant at this week’s September policy meeting.

U.K. August construction PMI beat expectations in rising to a seven-month high of 64.0, up from 62.4 in July. The details of the survey were strong, with employment rising sharply and over half of the companies in the sector expecting a rise in business activity over the next six months. The data helps offset the sharp drop in the manufacturing PMI survey, which was releases Monday. The services PMI will be complete the picture Wednesday.

In central bank news, The RBA left interest rates at 2.5% for the 13th straight month and repeated that the Australian dollar remains overvalued and that the labor market has a degree of spare capacity and that it will probably be some time yet before unemployment declines consistently. The decision had been widely anticipated.

The GBP/USD broke through horizontal trend line support and is poised to test the March 2014 lows at 1.6465.  Resistance is seen near the 10-day moving average at 1.6575.  Momentum has flattened as the MACD (moving average convergence divergence) index prints near the zero index level.  The RSI moved lower with price action reflecting accelerating negative momentum, which printing a reading of 28, which is below the oversold trigger level of 30 and could foreshadow a correction.

Article by ForexTime

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