When is the UK manufacturing PMI and how could it affect GBP/USD?

The UK manufacturing PMI overview

The UK manufacturing PMI is due for release today at 0830GMT and is expected to show that the pace of contraction in the activity quickened in September after reaching seven-year lows in August. The index is expected to arrive at 47.0 versus 47.4 booked previously.

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 1.65 to -2.50, although in some cases, if notable enough, a deviation can fuel movements of up to 80 pips.

How could affect GBP/USD?

The Cable remains depressed below the 1.23 handle so far this Tuesday, with the focus now shifting to a new Brexit plan likely to be unveiled by the UK PM Johnson later today. Meanwhile, Johnson brushed away criticism of leaked plans to manage the Irish border after Brexit.

Should the data suggest a deeper-than-expected contraction, the spot is likely to meet fresh supply, drowning the spot further towards 1.2255 (50-DMA), below which 1.2233 (Sept 9 low) could be targeted.

However, on a positive surprise, the GBP/USD pair could regain 1.2300, above which 1.2337/44 (Sept 30 and 27 high) could be tested en route 1.2382 (20-DMA).

Key Notes

UK: Manufacturing PMI likely to fall to 46.9 in September – TD Securities

GBP/USD forecast: Bears await a sustained break through 1.2270 support zone

Forex Today: EUR/USD fails to recover, Boris Johnson has new Brexit ideas, and a busy start to Q4

About the UK manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI) released by both the Chartered Institute of Purchasing & Supply and the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the UK. A result above 50 signals is bullish for the GBP, whereas a result below 50 is seen as bearish.