UK manufacturing PMI preview: What to expect of GBP/USD?
|The UK manufacturing PMI for December due for release today is expected to show that the pace of expansion in the activity decelerated slightly last month. The index is seen coming-in at 53.0 versus November’s 53.4 reading.
UK manufacturing sector activity likely to slowdown in Dec
A positive surprise in the manufacturing sector activity report would send the spot higher for a test of 1.24 handle. On the other hand, a steeper drop in the PMI reading could knock-off the GBP/USD pair back towards the mid-point of 1.22 handle.
An upside surprise should provide extra legs to the ongoing recovery seen in the major, with full markets returning to trade after the New Year’s holiday season.
Howard Archer, chief UK and European economist at IHS Global Insight, noted that the UK PMIs are “expected to indicate that the UK economy continued to hold up pretty well at the end of 2016”.
Deviation impact on GBP/USD
Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 50 pips in deviations up to 2 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.
GBP/USD: Technical levels to watch
Haresh Menghani. Analyst at FXStreet explains, “On daily chart, the pair remains below short-term moving averages and hence, any follow through momentum above 1.2300 handle might now confront resistance near 1.2335-40 region, marking 23.6% Fibonacci retracement level of 1.2775-1.2200 downslide in December. However, a convincing break through this immediate resistance might trigger a short-covering rally, even beyond 1.2400 handle, towards an important confluence resistance near 1.2425 region, comprising of 50-day SMA and 38.2% Fibonacci retracement level.”
“On the flip side, weakness back below 1.2270-60 immediate support is likely to drag the pair back towards 1.2225-20 horizontal support below which the pair seems vulnerable to break below 1.2200 handle and head towards testing its next major support near 1.2130-25 region.”
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