We are looking for a tradable deviation (or the difference between the forecast figure and the actual release figure) of 2.0, and because this is a leading indicator and its impact may hint that the future trend of other economic indicators (such as inventory, employment, retail sales, etc..) , therefore market should react to this release with volatility if we get our deviation.
We will be looking to BUY GBP/USD if we get a 59.1 or better, or looking to SELL GBP/USD if we get a 55.0 or worse, we’ll be using the Retracement Trading Method to trade this release
The Market
The Manufacturing PMI is forecasted at 57.1. Since PMI’s medium point is at 50, this forecast is considered as a positive release (above the 50 level means expansion in the manufacturing sector). If we get a 60 or better release, we should see some strong demand in the GBP. If we were to get a 55 or worse, market’s reaction could be muted or somewhat limited. With BOE rendering its rate decision on Thursday, market could be sitting on the sideline waiting for direction. We should do the same. It is possible some BOE officials could be commenting this week prior to the rate decision, so trust me on sitting on the sidelines, you’ll thank me later.
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