Sterling Lower After UK Manufacturing PMI Data – Breakout Under Recent Range Lows
- GBPUSD (pound/dollar) has seen a continuation of the prevailing bearish trend, after the UK Manufacturing PMI data released today revealed a return to contraction of the UK manufacturing sector in February.
- The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) dropped to 47.9 from a revised 50.5 reading in January, significantly out of sync with previous forecasts of a potential rise to 51.0.
- This report revealed that “output and new orders both registered falls since January” with “tough market conditions, both at home and abroad, weighing on demand”.
- Our previous update highlighted that demand for sterling was still limited,with the recent range highs coinciding with the 61.8% Fibonacci retrace of the last leg lower capping the GBPUSD price action in the near term.
- Cable has now dropped over 160 pips in the last hour, and is trading around 1.5039, after hitting a low of 1.5011 on significant volatility. The daily range is currently 184% of the 60-day ADR (average daily range).
- The 1.5000 round number area is now seen as key in the near term with a weekly close under this level possibly adding additional bearish pressure to the major currency pair.
- Any corrective move higher will need to contend with the 1.5080 area previous support level – which could potentially see an element of resistance.
PMI, GBPUSD News, Pound/Dollar Outlook. Nick Simpson, Forex-FX-4X.com