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

The UK economy will release its September construction PMI later in the European session, with the figure expected to dive deeper into contraction territory, with a 49.0 print predicted versus previous 49.2 result.

The UK construction sector activity is expected to stall its recovery mode in Sept from July’s worst reading witnessed in response to the immediate aftermath of the Brexit vote. Focus remains on the new orders volumes, which continued to fall during August.

Should the PMI reading surprise to the upside, we could see GBP/USD rebounding above 1.28 handle. Contrarily, the cable could test 1.2700 levels on disappointing results. However, the reaction to the data may be short-lived as the main driver for the pound remains the Brexit process-related uncertainty and anxiety.

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 40 pips in deviations up to 2 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 65 pips.

GBP/USD: Technical levels

Haresh Menghani, Analyst at FXStreet notes, “With short-term indicators already pointing to near-term oversold consolidation, the pair seems to either consolidate or witness some additional bounce from current levels. Any recovery attempt might now confront immediate resistance near 1.2870-80 region above which the momentum could further get extended beyond 1.2900 handle towards 1.2940 strong hurdle.”

“A follow through selling pressure below 1.2810 support should open room for continuation of the pair's near-term downward trajectory towards testing a short-term descending trend-channel support near 1.2725 region.”