UK manufacturing PMI preview: What to expect of GBP/USD?

UK manufacturing PMI for September due for release today, is expected to show the pace of expansion in the activity moderated somewhat. The index is seen coming-in at 52.1 versus August’s 53.3 reading. 

Expecting an upside surprise?

A better manufacturing PMI print would send the spot back onto 1.29 handle and beyond. On the other hand, a weaker-than-expected figure could push the cable further southwards in a bid to 1.2850 levels.

Should the PMI figure surprise markets positively, the bulls would be offered some respite from the Brexit fears-led heavy selling witnessed in the GBP/USD pair so far this Monday.

Banks’ views

Danske Research Team noted, “In the UK, PMI manufacturing data is due out. The PMI rebounded significantly in August after falling sharply in July just after the vote. Consensus is for a drop to 52 in September versus 53.3 in August.”

Analysts at TDS see the UK’s September manufacturing PMI to increase to 54.0 vs consensus of a decline to 52.1. “This pickup is underpinned by the CBI survey’s continued improvement in expected sales volumes, alongside some support from the flash European manufacturing PMIs, which pointed to further expansion in the sector in September.”

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 35 pips in deviations up to 4 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 60 pips.

GBP/USD: Technical levels to watch

Haresh Menghani. Analyst at FXStreet explains, “The pair’s rebound from 1.2915 support area now seems to confront immediate resistance near 1.2975 above which the recovery momentum could get extended towards testing a short-term descending trend-channel resistance near 1.3000 psychological mark.”

“Meanwhile on the downside, weakness below 1.2915 support might now accelerate the slide immediately below 1.2900 handle towards August monthly lows support near 1.2870. The downslide could further get extended towards testing the descending trend-channel support near 1.2750 region with 1.2800 round figure mark acting as intermediate support.”