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The British Construction PMI Index is based on a survey of Purchasing Managers in the construction industry. The survey includes about 170 respondents, who are surveyed for their view of 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

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 UK Construction PMI has been improving, and climbed to 49.4 points last month. However, the index has  bee  stuck below the 50-point level since  last November, indicating  ongoing contraction  in the construction industry. The markets are expecting a very slight increase   in the upcoming release, with an estimate of 49.7 points. Will the index surprise the market and push above the key 50 level?

Sentiments and levels

The markets  were treated to some volatility from the pound last week, as the pair moved between 1.50 and 1.52 during a busy week. GBP/USD did post some gains, but will it be able to consolidate them? The  British economy  continues to look weak, and British PMIs will have a major say in what direction the pair heads in this week. If the US rebounds from last week’s poor showing, the dollar could push higher against the pound.Thus the overall sentiment  is neutral  on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5484, 1.5416, 1.5258, 1.5189, 1.5061 and 1.5010.

5 Scenarios

  1. Within expectations:  48.0 to 52.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 52.1 to 55.0: An unexpected higher reading can send the pair well above one resistance line.
  3. Well above expectations: Above 55.0. The likelihood of a sharp expansion is low. Such an outcome could push the pair higher, and a second resistance line might be broken as a result.
  4. Below expectations: 45.0 to 47.9: A sharper decrease than forecast could push the pair below one support level.
  5. Well below expectations: Below 45.0: A reading  well below the 50 line  would indicate sharper 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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