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

The UK manufacturing PMI for January due for release today is expected to show that the pace of expansion in the activity to have slowed a bit last month. The index is seen coming-in at 55.9 versus December’s 56.1 reading. 

UK manufacturing sector activity likely to decelerate in Jan

A positive surprise in the manufacturing sector activity report would send the spot higher for a test of 1.26 handle. On the other hand, a bigger-than expected drop in the PMI reading could knock-off the GBP/USD pair back towards hourly 200-SMA located at 1.2514.

An upside surprise should rescue the bulls from the corrective slide seen in the major; after the rate rebounded sharply to 1.26 handle a day before.

Analysts at TDS noted, “We look for the UK’s manufacturing PMI to also eke a bit higher. Markets are looking for an essentially unchanged reading at 55.9, but despite the 2.5pt gain in Dec, we think that the index could gain another couple of tenths again in Jan to 56.3.”

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 50 pips in deviations up to 2 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.

GBP/USD: Technical levels to watch

At 1.2553, the upside barriers are lined up at 1.2592 (daily high), 1.2643 (Jan 25 high) and 1.2680 (Jan 28 high). While supports are aligned at 1.2514 (1h 200-SMA) and 1.2488 (Jan 28 low) and below that at 1.2450 (zero figure).