GBP/USD – Flat at Start of Week, Investors Eye Manufacturing PMIs, Aussie and Kiwi Show Gains

The spotlight will be on manufacturing reports on Monday, with the release of Manufacturing PMIs in the U.K. and the United States. Any unexpected readings from these key releases could trigger some movement from the pound,  which has been flat since late last week.

The British manufacturing sector has been struggling, with Manufacturing PMI readings mired below the 50-level, which separates contraction from expansion. In October, the PMI improved to 49.6, but is expected to dip to 48.3 in November. The story is practically a carbon copy in the U.S., with Manufacturing PMI pointing to contraction over the past three months. The estimate for November stands at 49.2 pts.

British Election Polls Show Tight Race

Only a week ago, Boris Johnson and his Conservatives had a comfortable 11 point lead in the polls ahead of Labour. That lead has shrunk to just 6 points in the latest polls, which could translate into neither party winning a majority. With less than two weeks until Election Day, the uncertainty could weigh on the British pound.

Technical Analysis

GBP/USD appears content to hover at the 1.2920 line, which has been the case since late last week. The 1.3000 line, which has psychological significance, appears safe for now. It was last tested on October 21st. On the downside, we find support at 1.2800. This is closely followed by the 50-EMA line at 1.2790.

Pacific Currencies – Summary

USD/CNY

USD/CNY is currently trading at 7.0432, up 0.18% on the day. The yuan is slightly lower, despite a positive reading from Caixin Manufacturing PMI. The index posted its fourth straight reading above the 50-level, which separates contraction from expansion. The November figure of 51.8 beat the forecast of 51.1 pts.

AUD/USD

AUD/USD has posted small gains on Monday, trading at 0.6780, up 0.29% on the day. The Aussie received a boost from Chinese Caixin Manufacturing PMI, which ticked up to 51.8, its highest level since December 2016. This outweighed soft readings from Building Approvals and Company Operating Profits, both of which recorded declines. On Tuesday, the RBA is expected to hold rates at 0.75%.