UK manufacturing PMI preview: What to expect of GBP/USD?

The UK economy will release its June manufacturing PMI later in the European session. Markets expect the manufacturing PMI to tick down to 50.0, after managing a narrow entry into the expansion territory at 50.1 in May.

Looming concerns over the fate of the UK economy after the Britons voted to leave the European Union (EU) last week are likely to weigh on the sentiment surrounding the Britain’s manufacturing sector last month. Any positive surprise is ruled out as Brexit aftermath continues to weigh on the markets.

A worse-than expected PMI reading could accentuate the selling pressure in the pound, sending cable lower towards yesterday’s low near 1.32 handle ahead of the construction and services PMI lined up for release next week.

However, the reaction to the economic data is expected to be limited as the latest rate cut talks from BOE Governor Carney and Brexit-related news flow will continue to have significant impact on the GBP/USD pair.

GBP/USD: Technical levels

Haresh Menghani, Analyst at FXStreet explains, “Following a decisive break below a short-term ascending trend-channel formation on H1 chart, the pair remains well anchored below flattening 50-hourly SMA. Hence, weakness back below 1.3300 round figure mark seems to drag the pair immediately towards 1.3235-30 support, below which the pair seems all set to head back towards multi-decade lows to test 1.3150 support area.”

“Conversely, strength above 50-hourly SMA resistance near 1.3390-95 region (nearing 1.3400 level), the pair could make an attempt to head back towards the ascending trend-channel break-point, now turned resistance, near 1.3470-75 area. Any follow through buying interest might continue to confront strong selling pressure around 1.3500 psychological mark.”