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Forex: GBP/USD pulls back from highs after load of US data, capped just below 1.5600

FXstreet.com (Barcelona) - The GBP/USD failed to reach the 1.5600 mark on its upside attempts, for now, coming as high as 1.5996 after employment data by ADP. Relevant economic data in the US was already published, and now, investors are getting ready for the FOMC meeting. As of writing, the pair is correcting and trading at 1.5560 area.

TD Securities analysts believe that the minutes of today’s FOMC meeting may be more interesting than the actual outcome, “as the minutes will show that the weaker run of US data has shifted the debate away from the exit of QE”. Today’s statement should also give signs of what is to come: “We expect the assessment of the economic and inflation outlook to be downgraded, reflecting a shifting emphasis relative to March when the prospect of a labor market recovery was beginning to tilt the balance towards tapering. This time around the rising uncertainty about the impact of fiscal austerity on growth and further moderation in core inflationary pressures will likely shift the balance back to an easing bias. And even though we do not expect the dial to go all the way to increasing the size of purchases, the risk of this has increased, albeit one that remains quite low”, wrote analyst Alvin Pontoh.

The April update of the ISM manufacturing PMI dropped from 51.3 to 50.7, disappointing investors by coming below market consensus of 50.9. ISM prices paid fell from 54.5 to 50.0, below 53.0 consensus. Markit manufacturing PMI improved slightly, from 52.0 to 52.1 in April. The US ADP employment report came in lower than expected, at 119K in April instead of the 150K expected, also with the March figure being revised lower from 158K to 131K. Construction spending in the US contracted by -1.7% in March, according to the US Census Bureau, disappointing the market that was expecting a 0.7% rise. February data was revised higher from 1.2% to 1.5%.

“The hourly chart shows price finding support in its 20 SMA, currently around 1.5540, while indicators aim slightly higher above their midlines”, wrote FXstreet.com independent analyst Valeria Bednarik. “In the 4 hours chart indicators maintain a neutral stance in positive territory, as per turning flat over the past 2 days. A strong Fibonacci resistance is located around 1.5610 with a break above this last pointing for an acceleration in the pair’s gains”, she added.

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