British Manufacturing PMI dipped into contraction zone, by scoring only 49.1 points in July, lower than last month’s 51.3 points and lower than 51.1 that was expected. GBP/USD is retreating from resistance as this is a very worrying sign.
Pound/dollar traded at 1.6455 before the release, clearly capped by the 1.6470 resistance line. It now trades at 1.64, with a lot of room for falls until the next cushion.
Purchasing managers in the manufacturing sector disappointed in the past four months, with the scores sliding more than expected. From the highs of above 60 points in January and February (reflecting strong growth), figures close to 50 mean very slow growth. A drop under 50 means contraction, and this is what we got now.
Later this week, we have PMIs from the services and housing sectors which are expected to trigger high volatility.
The rate decision on Thursday isn’t expected to provide news though. Despite high inflation in the UK, the economy is hardly growing and policymakers prefer to leave the rates unchanged, probably for another year or so.
Support is found at the region of 1.6280 to 1.63, followed by 1.6110. Resistance is at 1.6550. For more levels and analysis, see the British pound forecast.Get the 5 most predictable currency pairs