Home GBP/USD: Trading British Manufacturing Production

GBP/USD: Trading British Manufacturing Production

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 Wednesday at 9:30 GMT.

Indicator Background

The British Manufacturing Production indicator measures the changes in output produced by manufacturers and in the turning of inventory. If factory production is up, this signals economic growth.

Following a low reading of -0.3% in October, the indicator shot up in November to 0.2%, exactly as the market predicted. The market forecast for this month stands at -0.1%. Will this prediction again be correct?

Sentiments and levels

The worsening eurozone crisis continues to hurt the pound, although it did benefit last week from the coordinated action by the central banks.  Britain is bracing for a recession, and continuing weakness in the global markets is not helping matters. Thus, the overall sentiment is bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.59, 1.5850, 1.5780, 1.5690, 1.5633, 1.5576, 1.5520 and 1.5470.

5 Scenarios

  1. Within expectations: -0.3% to 0.1%: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.2% to 0.5%: An unexpected higher reading can send the pair well above one resistance line.
  3. Well above expectations: Above 0.5%: Such an outcome would prop up the pound, and a second resistance line might be broken as a result.
  4. Below expectations: -0.7% to -0.4%: A reading well into negative territory  could push GBP/USD below one level of support.
  5. Well below expectations: Below -0.7%: Such a scenario would push the pair downwards, possibly breaking a second support level.

For more about the pound, see the GBP/USD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.