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

FX:GBPUSD   British Pound/U.S. Dollar
UK manufacturing PMI for August is due for release today is expected to show the pace of contraction in the activity moderated somewhat. The index is seen coming-in at 49.00 compared to July’s 48.2 figure.

No signs of post Brexit gloom and doom

So far we have not seen any sign of post Brexit gloom and doom. It was just the July manufacturing PMI figure that triggered that matched the fear mongering spread by Anti Brexiteers. A positive manufacturing PMI figure; above 50.00; would put to rest whatever little speculation of post Brexit gloom and doom exists out there. Hence, we could see the bird revisit 1.32+ levels. The initial spike could take the pair even higher, although what matters is if the spot manages to hold above 1.32 levels on larger time frame charts.

On the other hand, a weaker-than-expected figure could yield a fresh slide to 1.3065 (previous day’s low). Moreover, a weak figure ahead of payrolls release and after hawkish Yellen would only underscore the growing monetary policy divergence between the Fed and the BOE.

Technicals – Stuck at 50-DMA

Pair’s failure to take out symmetrical triangle resistance on last Friday followed by a drop to 1.3059 and a recovery above 1.31 if followed by a failure at 50-DMA and a break below 1.3059 levels would open doors for a revisit to 1.29-1.2865 levels.

On the higher side, a convincing day end close above 1.3315 (23.6% of 1.5019-1.2789) would suggest trend reversal.
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