Manufacturing activity in the United Kingdom fell less than expected last month, a private survey revealed on Thursday. Markit reported that its PMI for the British manufacturing sector came in at 56.7 points in May, the strongest since June 2014, down from the preceding month's 57.3. However, market analysts anticipated a bigger drop to 56.5 during the reported month.
Furthermore, Markit noted that new order growth remained strong, whereas the pace of job creations hit its 35-month high in May. The Markit Senior Economist Rob Dobson said that the strong PMI data suggested that the British economy gained positive momentum in the second quarter. Strong manufacturing activity is set to provide a boost to the UK Prime Minister Theresa May's ruling Conservative Party ahead of the 2017 General Election, which is scheduled to take place on June 8. Markit also noted that domestic demand remained the key driver of growth in the manufacturing sector. Apart from that, the report showed that manufacturers' optimism over the economy hit a 20-month high last month.
US NFP is the main event today
GBP/USD attempts to break out from its trading range
Thursday ended with the Cable remaining flat, despite downside volatility initially prevailing. The 1.29 major level has proven to be a might foe, as the Pound struggled to climb over it through all of the week. With today's US NFP data due, the GBP/USD pair could breach the broadening rising wedge's support line, leaving the 1.28 psychological demand level to limit the losses. However, technical studies are still unable to confirm this possibility, meaning there is a chance the pair could burst through the 1.29 mark, thus, prolonging the wedge pattern.
Daily chart
Hourly chart
Bearish sentiment still prevails
Market sentiment is still neutral, as 51% of all open positions are long. At the same time, the number of orders to acquire the Sterling dropped from 57 to 53%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 59% of all open positions are short and the remaining 41% are long. Meanwhile, sentiment at Saxo Bank is also bearish, with 66% of traders now being short and the other 34% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound recovering
Traders believe the Cable is to rise above the 1.30 major level by the end of the next three months, as 55% of survey participants share this belief. While the current price is around 1.29, the average forecast for September 02 is 1.2951. The 1.34-1.36 range is now the most popular price interval, having 23% of the votes, while on the second place is the 1.20-1.22 interval, with 19% of the voters choosing it.