The British Construction PMI is based on a survey of Purchasing Managers in the construction industry. The survey includes about 170 respondents, who are surveyed for their view of a wide range of business conditions, including employment, new orders, prices and inventories. A reading which is higher than the market forecast is bullish for the pound.
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Wednesday at 8:30 GMT.
Indicator Background
The UK Construction PMI has been over the 50 point threshold since early 2011 , indicating steady growth in the construction industry. The May reading was a solid 55.8, but the June estimate is lower, at 54.7. Will the index surprise the market and avoid a drop this month?
Sentiments and levels
The pound had a miserable May, shedding a remarkable 9 cents against the US dollar. How much further can it drop? The deepening recession in Europe and crisis in Greece are sending nervous investors to safe haven currencies such as the dollar. Unless there is some unexpeected weak data out of the US, look for the greenback to continue to make inroads against the British currency. Thus the overall sentiment continues to be bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5600, 1.5521, 1.5415, 1.5361, 1.5309 and 1.5229.
5 Scenarios
- Within expectations: 52.5 to 56.5: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 56.6 to 60.0: An unexpected higher reading can send the pair well above one resistance line.
- Well above expectations: Above 60.0. The likelihood of a sharp expansion is low. Such an outcome could prop up the GBP, and a second resistance line might be broken as a result.
- Below expectations: 50.0 to 52.4: A sharper decrease than forecast could push the pair below one support level.
- Well below expectations: Below 50.0: A reading below the 50 point level would indicate contraction in the construction sector for the first time in over a year. This could push downwards on the pound, and GBP/USD could break a second support level.
For more about the GBP, see the GBP/USD.