GBPUSD Bulls Dented as Risks Imply Manufacturing Sector Recession
GBPUSD Analysis and News
- GBP Drops as Signals Point Towards Manufacturing Sector Recession
- UK Manufacturing PMI Weaker Than What Headline Suggests
Check out our Fundamental and Technical Q1 2019 forecast guide for GBPUSD
GBP Drops as Signals Point Towards Manufacturing Sector Recession
GBP fell across the board, in the wake of the today’s Mfg. PMI release in which the headline figure fell to a 3-month low at 52.8, below expectations of 53.5. In turn, IHS Markit stated that they see a clear risk of manufacturing sector recession as the Brexit storm continues to dent performance in manufacturing production. GBPUSD now hovering at intra-day lows, eying a test of the 200DMA at 1.3039, while EURGBP has pushed towards 0.8800.
UK Manufacturing PMI Weaker Than What Headline Suggests
While today’s Mfg. PMI remains in expansionary, it could possibly be weaker than what the headline suggests, given that stockpiling had provided a temporary boost. In January, manufacturers stock purchases were the highest on record, in an effort to build up stocks prior to the UK’s exit date from the EU.
GBPUSD PRICE CHART: 1-MINUTE TIME FRAME (INTRADAY February 1, 2018)
Data shows 49.2% of traders are net-long with the ratio of traders short to long at 1.03 to 1. The number of traders net-long is 8.5% higher than yesterday and 6.8% higher from last week, while the number of traders net-short is 1.0% higher than yesterday and 0.7% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes insentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
--- Written by Justin McQueen, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.