The British Manufacturing PMI (Purchasing Managers’ Index) is based on a survey of purchasing managers in the manufacturing sector. Respondents are surveyed for their view of the economy and business conditions in the UK. A reading which is higher than the market forecast 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
Market analysts are always interested in the views of purchase managers on the economy, as the latter are considered to be attuned to the latest economic and financial developments, and their expectations could be an indication of future economic trends.
The index recorded a reading of 52.1 in January, the first time the index was above the important 50 level since November 2011. The market forecast for February is for a similar reading, of 51.9. This would indicate some very modest growth in the hard-hit UK manufacturing sector.
Sentiments and levels
The pound has been able to shrug off weak economic news coming out of the UK, but how long can this last? The pair has moved upwards a spectacular six cents in 2012, so a correction of some kind is overdue. At the same time, investors and traders don’t seem to bothered by the sluggish UK economy. Thus, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.6265, 1.6132, 1.6065, 1.60, 1.59, 1.5775, and 1.5720.
5 Scenarios
- Within expectations: 49.0 to 55.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 55.1 to 58.1: An unexpected higher reading can send the pair well above one resistance line.
- Well above expectations: Above 58.1: Given the ongoing weakness in the manufacturing sector, the 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.
- Below expectations: 45.9 to 48.9: A sharper decrease than forecast could push GBP/USD downwards and break one level of support.
- Well below expectations: Below 45.9: A reading deep in negative territory would indicate substantial contraction in the manufacturing sector. This would likely push the pair downwards, possibly breaking a second support level.
For more about the pound, see the GBP/USD forecast.