GBP/USD: Trading the UK Manufacturing PMI September 2013

British  Manufacturing PMI Index is based on a survey of Purchasing Managers in the  manufacturing industry. The survey includes about  600 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 Wednesday at 8:30 GMT.

Indicator Background

Manufacturing PMI continues to rise steadily, and has been above the 50-point level since May, indicating ongoing expansion in the manufacturing industry. The index came in at 57.2 points in August, and little change is expected in September, with the estimate standing at 57.5 points.

Sentiments and levels

 It was Super September for the pound, which gained about six cents against the retreating US dollar. Will the rally continue? UK PMIs have looked very sharp  over the past few months, and strong  releases this week could give the pound a boost.  The US could face a government shutdown this week as the Democrats and Republicans play political hardball, and how this event plays itself out could have a major impact on the currency markets. Thus the overall sentiment continues to be bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6475, 1.6343, 1.6247, 1.6125, 1.6000, and 1.5936.

5 Scenarios

1. Within expectations: 55.0 to 60.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations:  60.1 to 64.0: An unexpected higher reading can send the pair above one resistance line.
3. Well above expectations: Above 64.0. The likelihood of a sharp expansion is low. Such an outcome could prop up the pound, and a second resistance line might be broken as a result.
4. Below expectations: 52.0 to 54.9: A sharper decrease than forecast could push the pair below one support level.
5. Well below expectations: Below 52.0: A weak reading 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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