GBP/USD: Trading the British Construction PMI April 2012

The British Construction PMI Index, released in the first week of the month, is  based on a survey of Purchasing Managers in the construction industry. Respondents are surveyed for their view of business conditions, and the index is an important indicator of activity in the construction sector.

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Tuesday at 8:30 GMT.

Indicator Background

The March reading came in at a strong 54.3. This figure not only beat the market forecast, but was also the highest reading since April 2011. The market forecast for this month is at 53.6, indicating some sustained growth in the construction sector.

Sentiments and levels

Despite lukewarm economic data coming out of the UK, the pound has showed great strength in 2012, gaining almost five cents against the greeenback. With the important level of 1.60 under attack, traders may join the fray and continue to support the pound at the expense of the dollar. Thus, the overall sentiment is bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6265, 1.6132, 1.6065, 1.60, 1.5923, 1.5892 and 1.5750.

5 Scenarios

  1. Within expectations: 53.1 to 54.1: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 54.1 to 54.6: An unexpected higher reading can send the pair above one resistance line.
  3. Well above expectations: Above 54.6: Such an outcome would prop up the GBP, and a second resistance line might be broken as a result.
  4. Below expectations: 52.6 to 53.1: A sharper decrease than forecast could cause GBP/USD to drop below one level of support.
  5. Well below expectations: Below 52.6: A very poor reading would likely push the pair downwards, possibly breaking a second support level.

For more about the GBP, see the GBP/USD forecast.

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