GBP/USD - Lead indicators favor weak UK PMI print, nears weekly 100-MA
|GBP/USD was dragged lower in Asia by the common currency, which weakened in response to the Catalonia referendum news. The spot faded the spike to 1.3402 and traded at 1.3365 at press time.
Focus on UK PMI
UK PMI manufacturing, due at 08:30 GMT is expected to show a slight deterioration in the pace of expansion in the activity to 56.4 in September vs. 56.9 previous.
Lead indicators favor weak PMI number
The Confederation of British Industry (CBI) released on September 22 showed UK manufacturers' order books softened in September but both total orders and export orders remained strong. As per the latest monthly Industrial Trends Survey, a net balance of 7 percent of manufacturers said order books were above normal but it was below August's 13 percent. A rise in export orders came in at 10 percent compared to 11 percent in August.
The lead indicator suggests the UK manufacturing PMI could miss estimates. A weaker-than-expected number could push the GBP/USD pair well below the weekly 100-MA level of 1.3344.
On the other hand, a better-than-expected number could lift Cable to Friday's high of 1.3443.
GBP/USD Technical Outlook
FXStreet Chief Analyst Valeria Bednarik writes, " From a technical point of view the daily chart shows that the weekly decline stalled at the 61.8% retracement of the latest upward move, at 1.3340, now converging with the 50% retracement of the same rally and a bullish 20 SMA. Technical indicators in the same chart hold above their mid-lines, with the Momentum trying to recover ground, but the RSI maintaining its bearish slope, this last leaning the scale towards the downside. In the 4 hours chart, however, the pair presents a neutral-to-bearish stance, as the pair remained limited below a bearish 20 SMA for most of the week, but technical indicators head nowhere around their mid-lines. A bearish acceleration through the 1.3340 support, should lead to a downward extension towards 1.3250 the next relevant static support."
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