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The Philadelphia Fed Manufacturing Index is an important leading indicator, and is based on a survey of manufacturers in the Philadelphia area. It examines manufacturers’ opinions of business activity, and helps provides a snapshot of the health of the manufacturing sector. A reading which exceeds the forecast is bullish for the British pound.

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Thursday at 14:00 GMT.

Indicator Background

The Philadelphia Fed Manufacturing Index measures regional manufacturing growth. The manufacturing sector is a vital component of the economy and the index is a useful gauge of the health and direction of the manufacturing sector.

The index bounced back smartly in February, climbing to 9.0 points.  This  easily surpassed the estimate of 4.2.  The  markets are expecting another solid release with the March estimate standing at  9.6 points.

Sentiments and levels

GBP/USD continues to send mixed messages, as the pair rebounded nicely last week after losses a week earlier. What should we expect this week?  The pound’s  fortune could  well depend on the Claimants Count Change release, which has been looking sharp recently. In the US, employment numbers have been  solid and an expected QE taper later this month is a dollar-positive event. So, the overall sentiment is neutral on  GBP/USD towards this release.

Technical levels, from top to bottom: 1.7180, 1.6990, 1.6823,  1.6705, 1.66, 1.6475.

5 Scenarios

  1. Within expectations: 6.0 to 13.0: In such a case, the  pair is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 13.1 to 16.0: An unexpected higher reading can send GBP/USD  below  one  support level.
  3. Well above expectations: Above 16.0: The chances of such a scenario are very low. The pair could break  below a second support line  on such an outcome.
  4. Below expectations: 3.0 to 5.9: A weak reading  could push GBP/USD higher, and  one  resistance line  could be broken as a result.
  5. Well below expectations:  Below 3.0: A  very poor release  would signal worsening conditions  in the manufacturing sector. In this scenario, the pair could break through a second resistance line.

For more on the pound, see the GBP/USD forecast.

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