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4 May 2016
UK construction PMI preview: What to expect of GBP/USD?
The GBP/USD pair slipped more than 200-pips on Tuesday after having received double whammy from tumbling oil prices on one hand, while a sudden rebound staged by the US dollar against its major peers also contributed to the steep losses seen the cable. As for today’s trade so far, the cable is seen attempting a minor-bounce from five-day troughs and finds support from stabilizing oil prices and a broadly muted US dollar.
Cable could resume Tuesday’s sell-off on poor construction PMI
The UK construction PMI reading for April is expected to tick lower from 54.2 seen in March to 54.1, underscoring concerns in the UK’s construction industry.
The manufacturing PMI released yesterday, slowed notably to 49.2 in April, down from 51.0 booked in March. The PMI dropped into contraction territory after more than two years in expansion. Hence, there is a likelihood that construction sector activity gets hampered, receiving a “negative rub-off” from the manufacturing sector.
In case the reading comes out horribly weak, sterling could see a sharp decline below 1.45 handle. Although the losses may remain capped as the main focus now remains on the US ADP data for fresh direction on the major.
GBP/USD Technical Levels
Haresh Menghani, Analyst at FXStreet explains, “On Tuesday, the pair broke through an important confluence support near 1.4630 level, comprising of a short-term ascending trend-channel support and 20-SMA. The pair subsequently dropped below 23.6% Fibonacci retracement level of 1.4009-1.4770 up-move. Hence, from current levels the pair seems vulnerable to extend its near-term corrective move towards and important support near 1.4480 level, also coinciding with 38.2% Fibonacci retracement level.”
“Meanwhile on the upside, 23.6% Fibonacci retracement level near 1.4585-90 area now seems to act as immediate resistance. Even if the pair manages to clear this immediate resistance, any further up-move now seems to be capped at the ascending trend-channel and 20-SMA support break-point, turned resistance near 1.4620-30 area.”
Cable could resume Tuesday’s sell-off on poor construction PMI
The UK construction PMI reading for April is expected to tick lower from 54.2 seen in March to 54.1, underscoring concerns in the UK’s construction industry.
The manufacturing PMI released yesterday, slowed notably to 49.2 in April, down from 51.0 booked in March. The PMI dropped into contraction territory after more than two years in expansion. Hence, there is a likelihood that construction sector activity gets hampered, receiving a “negative rub-off” from the manufacturing sector.
In case the reading comes out horribly weak, sterling could see a sharp decline below 1.45 handle. Although the losses may remain capped as the main focus now remains on the US ADP data for fresh direction on the major.
GBP/USD Technical Levels
Haresh Menghani, Analyst at FXStreet explains, “On Tuesday, the pair broke through an important confluence support near 1.4630 level, comprising of a short-term ascending trend-channel support and 20-SMA. The pair subsequently dropped below 23.6% Fibonacci retracement level of 1.4009-1.4770 up-move. Hence, from current levels the pair seems vulnerable to extend its near-term corrective move towards and important support near 1.4480 level, also coinciding with 38.2% Fibonacci retracement level.”
“Meanwhile on the upside, 23.6% Fibonacci retracement level near 1.4585-90 area now seems to act as immediate resistance. Even if the pair manages to clear this immediate resistance, any further up-move now seems to be capped at the ascending trend-channel and 20-SMA support break-point, turned resistance near 1.4620-30 area.”