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UK manufacturing production preview – What to expect of GBP/USD?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 9, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    The GBP/USD pair found support at 1.4178 (23.6% of 1.3835-1.4284) ahead of the data in the UK, which is expected to show manufacturing production recovered in January form the sharp decline seen in December.

    PMI indicated rise in output

    The Markit/CIPS Purchasing Managers’ Index, had clocked a three-month high of 52.9 in January, up from 52.1 in December. January’s rise in UK manufacturing production was driven by a rise in domestic orders.

    Consequently, actual manufacturing production figure could beat the estimated figure of 0.2% m/m and -0.7% y/y. Meanwhile, the industrial production is seen rising 0.4% m/m. That translates into an annualized figure of 0.0%.

    The GBP/USD pair had rallied on Feb 1, when an upbeat manufacturing PMI had hit the wires. Hence, markets may have priced-in a possibility of a better-than-expected manufacturing production number. Nevertheless, Cable could rally if the month-on-month figure prints in the positive territory as opposed to the expected figure of -0.7%.

    Meanwhile, a weaker-than-expected data would be a surprise and could send sterling lower across the board. The spot currently trades around 1.4190 levels.

    GBP/USD Technical Levels

    The immediate resistance is seen at 1.4252 (50% of 1.4669-1.3835), ahead of a major resistance at 1.4260 (trend line resistance), which if breached shall open doors for 1.4284 (previous day’s high). On the other hand, a break below 1.4178 (23.6% of 1.3835-1.4284) could trigger a drop to 1.4112 (38.2% of 1.3835-1.4284). A break be lower would expose hourly 200-MA currently stationed at 1.4070.
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