Home GBP/USD: Trading the British Manufacturing Feb 2012

GBP/USD: Trading the British Manufacturing Feb 2012

The British Manufacturing Production indicator provides analysts and traders with a snapshot of the health of the UK 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 9:30 GMT.

Indicator Background

The British Manufacturing Production indicator measures the change in manufacturing output. As manufacturing makes up some 80% of total industrial production, the indicator  is often a market-mover.

The indicator contracted by 0.2% last month, its second straight drop. The markets are expecting some improvement, with predictions for an increase of 0.3% this month. Will the indicator climb back into positive territory?

Sentiments and levels

2012 has been kind to the pound, with major gains against the dollar. With the US continuing to churn out favorable economic data, a rebound by the dollar may not be far off. Thus, the overall sentiment is  neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6132, 1.6065, 1.60, 1.59, 1.5758, 1.57 and 1.55.

5 Scenarios

  1. Within expectations: 0.0% to 0.6%: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.7% to 1.1%:  An unexpected stronger reading  could  send the pair above one resistance line.
  3. Well above expectations: Above 1.1%: Given the recent downward trend of the indicator,chances of a sharp expansion are low. Such an outcome would prop up the GBP, and a second resistance line might be broken as a result.
  4. Below expectations: -0.4% to -0.1%: A sharper decrease than forecast could cause GBP/USD to fall drop below one  level of support.
  5. Well below expectations: Below -0.4%: A reading well below zero  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.