The British Manufacturing Production indicator provides analysts and traders with a snapshot of the health of the manufacturing sector. A reading which is higher than the market prediction is bullish for the pound.
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Thursday at 8:30 GMT.
Indicator Background
The British Manufacturing Production indicator measures the changes in output produced by manufacturers and in the turning of inventory. A reading which is higher than the market forecast is bullish for the pound.
The indicator slumped last month, posting a decline of 0.1%. The market forecast for May is much better, with a prediction of 0.4%. Will the indicator comply and bounce back into positive territory?
Sentiments and levels
GBP/USD has lost some ground to the dollar, traders should keep in mind that the trend in 2012 has been overwhelmingly in favor of the pound. The British currency has had great success against the dollar, despite much stronger data in the US than in the UK. If releases out of the US are not to the market’s liking, we could see the pound bounce back in a hurry. Thus, the overall sentiment is bullish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.6474, 1.6356, 1.6265, 1.6142, 1.60 and 1.5930.
5 Scenarios
- Within expectations: 0.1% to 0.7%: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.8% to 1.1%: An unexpected higher reading can send the pair well above one resistance line.
- Well above expectations: Above 1.1%: A very strong reading could prop up the pound, and a second resistance line might be broken as a result.
- Below expectations: -0.3% to 0.0%: A zero or negative reading could cause GBP/USD to drop below one level of support.
- Well below expectations: Below -0.3%: This would indicate contraction in the manufacturing sector, and the pair could break a second support level.
For more about the pound, see the GBP/USD forecast.
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