Forex: GBP/USD upside capped around 1.5740

The sterling is now following its European peer on Monday, retracing initial gains after today’s tops in the vicinity of 1.5740

In the data space, the UK construction PMI came in at 48.7 during January, matching December’s print although below the 49.4 forecasted.

“The combination of a reversal of euro safe haven flows, general euro strength, the currency market pricing in further BoE monetary easing and the fear of the UK experiencing a triple dip is in our view weighing on GBP”, argued Chief Analyst A. von Mehren at Danske Bank.

At the moment, the cross is up 0.16% at 1.5718 with the next resistance at 1.5780 (MA10d) followed by 1.5879 (high Feb.1).
On the flip side, a breakdown of 1.5674 (low Jan.28) would open the door to 1.5636 (low Aug.16).

Feb 4, 2013

Forex Flash: BoE to stay on hold thanks to UK Services PMI – TD Securities

The January Construction PMI came in disappointing, at the same pace of December (at 48.7), instead of rising to 49.1 as expected. “The poor weather was cited as one factor, but in general demand remained weak even though expectations started to improve", wrote analyst Richard Kelly, expecting a higher Services figure. "The takeaway for the more crucial Services PMI on Tuesday is that we should still see an increase as the weather impact doesn’t seem that bad, but probably enough to keep it from rebounding above 50 as it could have without the freezing temps and snow", wrote analyst Richard Kelly, thus expecting the BoE to stay on hold.

Forex: EUR/JPY finds support at 126.00 handle

Having gone to as high as 126.70 on the European morning, the EUR/JPY eventually eased further down to the 126.00 psychological level, where it is finding support. The cross is down by -0.47% on the day as it corrects from Friday's strength, when it rallied to just below 127.00.