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GBPUSD Extends Losses on Brexit Uncertainty and Soft Manufacturing PMI

GBPUSD Extends Losses on Brexit Uncertainty and Soft Manufacturing PMI

2018-09-03 09:00:00
Justin McQueen, Analyst
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GBPUSD Analysis and News

  • UK Manufacturing Falls to 25-Month Low
  • GBP Extends Losses on Manufacturing Report, Brexit Uncertainty Also Dominates

Check out our Fundamental and Technical Q3 forecast guide for GBPUSD

UK Manufacturing Output Falls to 25-month Low

UK Manufacturing PMI fell to a 25-month low at 52.8 in August, missing expectations of 53.8. This was coupled with a downward revision to 53.8 from 54. GBP fell to fresh intra-day lows upon the release to 1.2886. IHS Markit stated that weak reading had been influenced by new orders contracting for the first time since April 2016, while business optimism dipped to a 22-month low. On the employment front, job creation slowed to near-stagnation.

Brexit Concerns Dominate GBP

The Pound has begun the week on the backfoot as Brexit uncertainty continues to remain rife. Comments made by Barnier over the weekend that he strongly opposes aspects of PM May’s Chequers plan has weighed on GBP. However, despite the scepticism, PM May continues to stand firm her Brexit plan. As the House of Commons returns from the Summer holiday, Brexit is likely to dominate and keep the Pound volatile.

GBPUSD PRICE CHART: 1-MINUTE TIME FRAME (INTRADAY September 3, 2018)

GBPUSD Extends Losses on Brexit Uncertainty and Soft Manufacturing PMI

Chart by IG

What Does Positioning Tell us About the Direction in GBPUSD?

Data shows 67.0% of traders are net-long with the ratio of traders long to short at 2.03 to 1. In fact, traders have remained net-long since Apr 20 when GBPUSD traded near 1.40186; price has moved 7.6% lower since then.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall.

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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