Today the Markit UK Manufacturing PMI data was released. Even though data showed a slight expansion of 54.6, it was still the slowest in the past three months. In January, output was at a modest 55.9 and today’s release was below consensus. Manufacturing activity and output cooled off in February, more growth is expected this quarter. According to Markit, this quarter’s manufacturing output may expand by about 1.5%. If it does, this will be the highest ever recorded in the past decade. The issue of cost related inflation brought about by sharp rise of export and increasing supply chain also eased according to the report. The weak pound is contributing to this expansion because UK merchandise are becoming cheaper in the global markets. Mortgages approval also climbed higher in February as more money circulated in the UK.
Watch out German CPI data and Personal spending in the US later in the NY session. German CPI will be important for this pair. Economists are expecting CPI to rise in Germany.
Trading this pair will involve unloading the GBP. Already there is a clear break above resistance trend line in the daily chart. The oversold stochastics which printed a buy signal a couple of days ago should mean more buys. In the 30 min chart, there is an overbought stochastics which is in line with the daily chart trend. Look to enter and go long.
Trading will pan out as follows:
Stop Loss: 0.8195
Take Profit: 0.8560-75
Have a good trading day.