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

The UK economy will release its July manufacturing PMI later in the European session. Markets expect the manufacturing PMI to come in at 49.1, same as that seen in June.

Michael Hewson, chief market analyst at CMC Markets UK, noted, “We saw this fall to 49.1 from 52.1... however there is a chance that we could see this revised higher given that the flash number was taken at a time when political uncertainty was at elevated levels. This is no longer the case and this might be reflected in a slightly improved number.”

A worse-than expected PMI reading could accentuate the selling pressure in the pound, sending cable lower to test 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 main risk event for this week is expected to be the BOE interest rate decision due out this Thursday.  The BOE is expected to lower the benchmark interest rate by 25 bps to record low of 0.25%.

GBP/USD: Technical levels

At 1.3240, the pair has an immediate resistance at 1.3272/76 (daily top/ R3), above which 1.3300 (round figure) would be tested. On the flip side, support is seen at 1.3218 (5-DMA) below that at 1.3183/75 (10 & 20-DMA).