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

The UK manufacturing PMI for November due for release today is expected to show the pace of expansion in the activity accelerated slightly last month. The index is seen coming-in at 54.4 versus October’s 54.3 reading. 

UK manufacturing sector activity likely to improve in Nov

A better-than expected manufacturing sector activity report would send the spot higher for a test of 1.26 handle. On the other hand, a weaker-than-expected figure could knock-off the GBP/USD pair back towards key support located near 1.2470 region.

A better print should provide extra legs to the ongoing bullish run seen in the major, which could back recent upbeat comments delivered by BOE Governor Carney on the UK economy.

Analysts at Danske Bank noted, “In the UK, the PMI manufacturing index for November is due to be released today. The index rebounded significantly after the Brexit vote, supported by the weaker GBP and higher global PMIs, and we expect PMI manufacturing to increase further to 55.0 for November (consensus: 54.4).”

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 50 pips in deviations up to 2 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.

GBP/USD: Technical levels to watch

Haresh Menghani. Analyst at FXStreet explains, “The pair is now sustaining its strength above 50-day SMA, and 1.2500 handle, and now seems to be preparing for a move past 1.2535-40 resistance area representing 38.2% Fibonacci retracement level of 1.3439-1.1980 recent down-leg. A convincing break through this immediate resistance is likely to trigger a short-covering rally immediately towards 1.2600 handle above which a fresh bout of buying interest should open room for further near-term recovery for the pair.”

“Meanwhile on the downside, weakness back below 1.2500 mark might now find support at 50-day SMA resistance break turned support, near 1.2465-60 region. Renewed selling pressure back below 50-day SMA support would negate expectations of further recovery and drag the pair below 1.2400 handle, towards testing a short-term ascending trend-channel support near 1.2350 region.”