GBP/USD Hits Session Low As UK Manufacturing Slows to 17-Months Low
- UK Manufacturing PMI (Sep): 51.6 Actual Vs 52.7 Estimated; 52.2 Prior.
- US Dollar Approaching 12-Weeks of Gain, Longest Since September 2008.
- GBP/USD Plunged to Trade Below 1.6200 After UK Manufacturing PMI.
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According to Markit, the UK Manufacturing PMI accelerated to 51.6 in September compared to an expansion of 52.5 in August. However, this missed market expectations calling for a print of 52.7 and the manufacturing index slowed to a 17-months low. Although a reading above 50 signals expansion, the British manufacturing activity seems to have decelerated. This is on the backdrop of better-than-expected quarter-on-quarter 2Q GDP data.
Progressing ahead, GBP/USD may find renewed volatility from September’s USDADP Employment Change andISM Manufacturing Data, which will cross the wires at 12:15 and 14:00 GMT respectively. Better-than-expected data from the aforementioned economic releases will bode-well for the US Dollar and support the possibly the longest string of gains for the benchmark currency since September 2008, at the height of the financial crisis.
For those Forex traders that endorse technical analysis, DailyFX Currency Strategist Ilya Spivak mentions near-term support to rest at 1.6088 (38.2 percent Fibonacci Expansion) and resistance at 1.6255 (23.6 percent Fibonacci Expansion). He is short the cable at 1.6233, initially targeting 1.6088. Meanwhile according to DailyFX Speculative Sentiment Index, the ratio of long to short positions in the GBP/USD stands at 1.11 as 53 percent of traders are long.
GBP/USD 5 Minute Chart
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Edward Hyon, DailyFX Research Team
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