UK manufacturing PMI preview: What to expect of GBP/USD?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 1, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    The corrective rally in GBP/USD gathered pace in early Europe, taking the pair higher to 1.3976 levels ahead of the UK manufacturing PMI release.

    Strong UK PMI to support correction in Cable

    The data is expected to show the pace of expansion in the manufacturing sector slowed further in February. The headline figure is seen printing at 52.2, which is slightly lower than January reading of 52.9.

    The doors are open for an old school knee jerk upside move in Pound if the data surprise markets on the higher side. This is because the Brexit fears have taken a backseat for now and the currency pair is oversold on technical charts.

    On the other hand, a weaker-than-expected PMI number could play a spoil sport and mark an end to the ongoing technical correction in the pair.

    Investors would also scan the details of the report to see if the export orders growth held up well and whether the sector continued contributing to the labor market tightening in the UK.

    GBP/USD Technical Levels

    The immediate resistance is seen at 1.40, which if taken out could see the pair target 1.4032 (23.6% of 1.4669-1.3835). A break higher would expose 1.4079 (Jan 21 low). On the other hand, a break below the immediate support of 1.3935 (5-DMA) – 1.3924 (76.4% Fibo expansion of July 2014 high-April 2015 low-June 2015 high) would open doors for a break below 1.39 and a re-test of a major hurdle at 1.3835 (Feb 29 low).
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