GBP/USD Broke Above Minor Resistance Amid Improving Manufacturing Data in the UK

United Kingdom – Manufacturing PMI

Yesterday, at GMT 9:30 a.m., the Markit released the United Kingdom’s manufacturing purchasing managers’ index (PMI) figure, which measures the level of a diffusion index by surveying around 600 purchasing managers in the country.

Since businesses are the first to react to changing economic climate and the PMI is calculated based on survey questions covering employment, production, price levels, new order situations as well as inventory conditions; US binary options traders consider this data to be a leading indicator of the overall economic health of the country.

Last month, in January, the UK’s manufacturing PMI came out at 52.1 and the forecast for February was set at 51.8. However, the actual figure came out much better, 52.9.

United States – Institute for Supply Management (ISM) Manufacturing PMI

Later, at GMT 3:00 p.m., the Institute for Supply Management released its manufacturing PMI figure for the United States. The ISM’s US manufacturing PMI measures the level of a diffusion index based on a survey of 400 purchasing managers.

Purchasing managers in the United States are involved in the supply side of the economy. As most companies reduce their expenses and production based on their sales forecast, the survey of purchasing managers reveals the overall optimism of various companies in the country. Hence, binary options investors can easily figure out the sentiment regarding the economic condition in the country from the ISM manufacturing PMI readings.

Last month, the ISM manufacturing PMI for the United States came out at 48.2 and the forecast for this month was set at 48.6. However, the actual figure remained unchanged at 48.2.

Trade Recommendation for the GBP/USD

GBPUSDDaily

Although the GBP/USD has been trending downwards for the last several months, the downturn accelerated since December 13, 2015, when the pair tested the long-term downtrend line and failed to break above it. Since then, the GBP/USD price has fallen around 1150 pips.

On January 21, the GBP/USD finally found support around the 1.4130, and formed a bullish outside bar (BEOB), which started a bullish retracement move. Last week, the GBP/USD price penetrated and closed above the intermediate downtrend line, and this week it has closed above the minor resistance level around 1.4365.

As the UK’s Manufacturing PMI figure came out slightly better than what the market was expecting, the fundamental outlook also suggests that there is a bullish momentum building up in the market.

Under the circumstances, it would be recommended that binary options traders consider placing a CALL order for the GBP/USD with their binary options brokers at the current market price, as long as it is trading above the 1.4365 level.

Recommended Broker: Finpari

 

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