The GBP/USD is consolidating below the psychological 1.70 level as investors lock in profits in reaction to weaker than expected employment and non-manufacturing PMI data from America. However, the Pound is exerting a relative strength after more encouraging British economic data. Britain’s services PMI, manufacturing production, and Halifax HPI numbers all indicate a faster than expected return to growth in the UK.

Possibly the most positive development today is the better than expected services PMI data. The services industry, particularly financial, makes up a large part of Britain’s GDP. Hence, the upward trend and 50+ reading in the services PMI data point is key, reinforced by a better than expected earnings release from Lloyd’s Bank. Today’s data confirms the theme of a substantial recovery in manufacturing and Britain’s housing market. Britain’s economy is hitting on all cylinders considering unemployment is declining as well. This week’s wave of positive economic data adds weight to our belief that the BOE will not increase funding to its QE package tomorrow. Investors will be paying close attention to the result of tomorrow’s BOE meeting, searching for clues as to the central bank’s attitude regarding future monetary policy.

Meanwhile, the GBP/USD should continue to enjoy its comparative strength since Britain’s economic data is encouraging across the board. The GBP/USD’s main barrier to further near-term gains is the S&P’s interaction with 1000. Therefore, investors should keep a close watch on U. S. equities and monitor the S&P’s ability to tackle 1000. Regardless, the GBP/USD has made considerable strides to the upside with medium-term momentum acting in the currency pair’s favor. Hence, the uptrend is alive and well despite today’s consolidation. The psychological 1.70 level and our 1st tier downtrend line serve as the Cable’s immediate-term obstacles. As for the downside, the currency pair has our fresh 1st and 2nd tier uptrend lines along with Tuesday’s lows to fall back on.

Present Price: 1.6954

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