- The Sterling is pushing higher heading into the European session ahead of the UK Construction PMI.
- The UK PMI is forecast for a slight contraction in the figure, and broad market risk sentiment is balancing for now.
The GBP/USD is catching some lift ahead of the European session, reaching an Asia high of 1.0496 but hesitating near yesterday’s high of 1.4088.
The Sterling has managed to brush off most of early 2018’s declines brought about by consistent routs in risk assets as inflation concerns and trade war fears continue to knock risk appetite lower, but the Sterling has remained resilient, although January’s high mark of 1.4344 remains unchallenged.
Wednesday sees the GBP/USD facing the UK’s Construction PMI for March at 08:30 GMT, which is forecast to print at 50.8, a slight decline from the previous reading of 51.4. Economic indicators are beginning to show a slowdown in activity heading into the middle quarters of 2018, but growth prospects remain high overall and the Bank of England (BoE) is on pace to begin lifting interest rates soon, with many expecting a rate hike by mid-May.
Traders should note that Wednesday also drops the Eurozone CPI at 09:00 GMT and risk appetite could swing in knock-on action for the Sterling if the numbers hit or miss by a large enough margin. Broad market sentiment has been focused heavily on the ongoing trade spat brewing between the US and China, and a poor showing for the European continent could sour the broader mood and spark a risk flight.
GBP/USD Levels to watch
The GBP/USD is pricing in a potential bullish turnaround from the 1.4000 handle, and a continuation of bullish momentum will need to break through resistance at last week’s previous support at 1.4110 and the swing high at 1.4235, while a bearish reversal of the current action will see support from the 34-day EMA at 1.3990 and the previous Daily swing low at the 1.3800 major level.