Profit Mongers @ 3:00 AM, Thursday December 01 2011
04:28 GBP Manufacturing PMI (47.0 expected, 47.4 prior, 46.0 to 48.0 range)
The governments plan was to kickstart the manufacturing sector to help creat jobs lost
by the public sector and to keep growth going as other sectors contract, like the finance
sector, but although there was some initial optimism late last year and earlier this year
that peetered out and now we have started getting quite dismal readings from this one.
Last month this came out with GDP which was slightly higher but this one came out below
the critical contraction/expansion level of 50, and the pound fell. This month the number
is expected close to what last month's release was. So we see the -2.4 last month was
strong enough deviation to push the Pound down despite a +0.2 on GDP. Watch out for any
moves ahead of the release as there can be rumors/leaks on some UK data. The July release,
where most of the move occurred before the number came thru, very little left to move after
that, just a -1.0 deviation was not enough to continue the move. Triggers as tight as +/-1.2
can work on this, but watch the moves before the release and widen the sell trigger is Cable
sells off before it, and vice versa if cable rallies ahead of the release (unlikely as this is).
If this happens a more conservative deviation of +/-1.8 or +/-2.0 could be used. LIKEWISE, if
cable moves down before the release then you can tighten the BUY trigger to even something like
+0.8. If there is alot of pessimism around cable might even rally if this number comes out as
expected.
-If it comes out at +48.5 or more, GBP/USD should rally 40-70 pips.
-If it comes out at +45.8 or less, GBP/USD should drop 40-70 pips.
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