British Pound: USD/GBP (GBP=X) Manufacturing PMI Points to Contraction

British Pound: USD/GBP (GBP=X) Manufacturing PMI Points to Contraction

GBP/USD is trading sideways on Monday. Currently, the pair is trading at 1.3082, up 0.14% on the day. The pound managed to post slight gains over the week, its first winning week of the year. On the economic front, we’ll get a look at mortgage approvals by major British banks and the Nationwide House Price Index, both of which are expected to accelerate.

Manufacturing PMI Points to Contraction

The week wrapped up with the release of initial PMIs for January. The manufacturing PMI improved to 49.8, compared to 47.5 in the final December PMI. Still, this points to contraction in the manufacturing sector, which continues to struggle. The services PMI indicated expansion, with a reading of 52.9 points. This was up nicely from the final PMI in December of 50.0 points. As well, this figure beat the forecast of 51.1 points.

The Bank of England will be carefully monitoring these key releases. Bank policymakers have been hinting at a rate cut when they meet to set the benchmark rate Thursday and the weak state of the manufacturing sector remains a concern.

Technical Analysis

GBP/USD is range-bound on Monday. The line of 1.3100 remains relevant and is currently an immediate resistance line. This is followed by resistance at 1.3150. On the downside, there is major support at the round number of 1.3000.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.32.

The projected lower bound is: 1.29.

The projected closing price is: 1.31.


A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 37.6894. This is not an overbought or oversold reading. The last signal was a sell 17 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 49.06. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 30 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 1. This is not a topping or bottoming area. The last signal was a buy 5 period(s) ago.


The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.000 at 1.306. Volume was 100% below average (consolidating) and Bollinger Bands were 47% narrower than normal.

Open     High      Low     Close     Volume___
1.305 1.306 1.305 1.306 405
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.31 1.31 1.27
Volatility: 6 9 9
Volume: 92,509 96,855 115,248

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.


FOREX GBP= is currently 2.9% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of GBP= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 12 periods.

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