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GBP / USD Trading Outlook

Monday 2nd July

Sterling- dollar was lifted on Thursday and Friday last week on US dollar weakness as the EU summit gave the market confidence to take on more risk and unwind long USD safe haven positions. The pair rallied from 1.5488 up to 1.5714 towards the New York close. The Asian open gapped lower and came to trade in the mid-1.56s. However, the UK PMI for manufacturing surprised with a better result at 48.6 vs. 46.5 expected which has given sterling short-term support bouncing back to 1.5693. This break opens up the resistance level 1.5710. Looking ahead a stronger resistance is seen at 1.5734 (as reported by UBS and Trading Central) and a break of this may open the way to 1.5775 (20th June high). At 15:00 BST the US ISM for manufacturing will be released this is expected to be 52.0 which will indicate a positive outlook (since the figure is above 50).

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