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GBP/USD forex signal - UK Manufacturing PMI - 01 May 2018

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The monthly manufacturing PMI data from the UK will be released by the Office for National Statistics today at 08:30 GMT. The data will cover the period of April. According to the economists polled, manufacturing activity in the United Kingdom is forecast to slip to 54.9 on the index. This marks a slower pace of increase from 55.1 seen the month before.

Manufacturing activity in the UK has been in a steady decline since the index reached highs of 58.2 in November last year. Since then, manufacturing sector in the UK has been logging steady declines.

The first quarter manufacturing PMI declines already reflected in the first quarter GDP growth report. The UK's economy was seen expanding at a slower pace of 0.1% during the first three months of the year.

The decline in the manufacturing sector, along with other sectors such as construction and services comes amid the backdrop of the Brexit uncertainty. Despite some inroads being made and the possibility of a smooth Brexit being the likely outcome, higher consumer prices and business uncertainty has kept activity subdued.

Today's report could potentially spring a surprise with a rebound in activity. This could potentially revive some strength into the British pound. However a weakness in the manufacturing sector for yet another month could spell more weakness.

Based on the above, today's forex trading signal is GBPUSD. The currency pair, which was initially seen trading stronger fell sharply last week as price crashed below the 1.4000 round number support. The short term strength in the U.S. dollar also contributed to the declines in the GBP.

The British pound was seen extending the declines yesterday but we suspect that the declines are overstretched. Therefore, in the short term we expect a rebound in prices. We are looking to go long on GBPUSD at 1.3770 targeting 1.3850 with stops at 1.3730 as we expect to see GBPUSD attempting to close higher on the day.

forex trading signal gbpusd 01 may 2018

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.