GBP trading on Tuesday is too volatile. The pound/dollar in Asia fell to 1.4378 from a 1.4444 maximum as part of a correctional recoil on the euro/pound. After business activity indices’ reports came out for construction in the UK, the pound weakened against the dollar to 1.4325. The correction against Monday totalled 100 points or around 38.2% (Fibonacci coefficient).
The pound jumped to 1.4410 ( 85 points) from 1.4325. Demand for the pound was caused by Eurozone PMI deflation.
The UK construction sector slowed: the PMI fell in January to 55.0 against December’s 57.8 (forecasted: 57.5).
The Eurozone’s PMI for December fell by 0.8% MoM and by 3.0% YoY (forecasted: -0.5% MoM, -2.9% YoY, previous: -0.2% MoM, -3.2% YoY).
The euro/dollar is trading above 1.0900. Demand for the euro persists after a fall in oil and flight from risky assets. Decent labour market data from Germany assisted, with the number of unemployed and unemployment as a whole down.
The Shanghai Composite closed up to 2,749.57 ( 2.26%). The Nikkei 225 fell by 0.64% and the French CAC 40 lost 2.0%, dropping to 4,305.12 points. The German DAX fell by 1.38% to 9,623.23 points. The UK FTSE100 fell 1.74% to 5,954.81.
The economic calendar for this evening is empty. Movements on dollar pairs will depend on that of the stock markets. The technical picture on the hourly timeframes is set against the USD. The euro bulls are gearing up to pass the 1.0950 resistance. The road to 1.4465 is open for the pound/dollar.