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Forex: GBP/USD consolidates gains at 1.5570

FXstreet.com (Barcelona) - The GBP/USD jumped on the back of improving UK manufacturing PMI, against expectations, rising about 50 pips to 1.5591 high. Profit taking process pulled the GBP/USD to a narrow trading range around 1.5570, where it’s offering support for the London morning gains.

The UK manufacturing PMI came in at 49.8 in April, following 48.6 in March and above consensus of 48.5. “Details of the report showed that the improvement was driven by an uptick in new export orders from everywhere but the Eurozone, while employment continued to contract”, wrote TD Securities analyst Marcin Budkiewicz. “While producers did see some lower prices, they also reported that the weakness in sterling was pushing up some prices, a theme we think will be echoed in the May Inflation Report and the reason why the MPC does not want to talk GBP any lower at the moment”, Budkiewicz added.

Earlier, UK Nationwide housing prices came in lower than expected: MoM contraction by -0.1%, instead of +0.3% consensus; YoY rise from 0.8% to 0.9%, instead of 1.2% forecast.

The New York session is right ahead, with an important load of data in the US. “For the ADP we’re looking for a reading of 160K, essentially on top of the actual outcome for March (158K), but slightly higher than consensus of 150K. For the ISM we see a slight downside risk and are looking for an outcome of 50.4 (mkt 50.7), which would leave the ISM at its lowest level since November 2012”, wrote TD Securities analyst Alvin Pontoh, expecting a shift to an easing bias on the FOMC meeting due to the rising uncertainty about the impact of fiscal austerity on growth and further moderation in core inflationary pressures.

“It retains scope to rally towards the top of the short term up channel at 1.5591 today and the 50% retracement at 1.5600. We favor failure here”, wrote Commerzbank analyst Karen Jones, adding that conflicting signals could allow for one more push higher to 1.5761/82 (200 day ma and 61.8% retracement, where we would expect to see failure).

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