The British Construction PMI Index is based on a survey of purchasing managers in the construction industry. Respondents are surveyed for their view on a wide range of business conditions, including employment, new orders, prices and inventories. 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 Tuesday at 8:30 GMT.
Indicator Background
The UK Construction PMI has been over the 50 point level since early 2011 , indicating steady growth in the construction industry. However, the index has fallen for the past two consecutive readings, and the forecast calls for another drop, to 53.1 points. Will the index surprise the market and rebound upwards this month?
Sentiments and levels
The GBP was fairly quiet this past week, until the dramatic announcement out of the EU Summit. The turmoil in the Euro-zone will be isn’t going to disappear anytime soon, however, and the US economy is also showing weakness. We could see some further movement by GBP/USD following the QE announcement by the BOE this week. Thus, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5992, 1.5805, 1.5750, 1.5648, 1.56 and 1.5221.
5 Scenarios
- Within expectations: 50.0 to 56.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 56.1 to 59.0: An unexpected higher reading can send the pair well above one resistance line.
- Well above expectations: Above 59.1: The likelihood of a sharp expansion is low. Such an outcome could prop up the GBP, and a second resistance line might be broken as a result.
- Below expectations: 47.0 to 49.9: A sharper below the 50 point level could push the pair below one support level.
- Well below expectations: Below 46.9: Such an outcome would indicate significant contraction in the construction sector. This could push downwards on the pound, and GBP/USD could break a second support level.
For more about the GBP, see the GBP/USD forecast.
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