The final value of the British manufacturing PMI is better than expected, and the pound rebounds sharply or is turning for the better

On Friday (October 1), the pound rose sharply against the US dollar. Supported by the weakening of the US dollar and the better-than-expected final value of the UK manufacturing PMI, SMS focused on the resistance at the 1.36 mark. If it can break through, it is expected to suspend the current decline.

The final value of UK manufacturing PMI is better than expected

A survey showed that UK manufacturing activity suffered its weakest month since February in September, when the UK was basically still in lockdown. The survey highlights the impact of supply chain issues and staff shortages on manufacturers.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers Index (PMI) in September fell for the fourth consecutive month, falling from 60.3 in August to 57.1. The final value in September was higher than the initial value of 56.3.

Delivery delays have seen one of the largest jumps in the history of PMI. There are reports of delays in freight transport, staff shortages, interference caused by the new crown epidemic and Brexit, and port delays.

New export orders shrank for the first time in eight months, job growth was the weakest since January, and small manufacturers laid off workers.

Last week, the Bank of England lowered its forecast for economic growth in the third quarter of 2021 due to tight supply, which now also includes fuel shortages caused by lack of truck drivers.

These bottlenecks have pushed up prices, and the September manufacturing input price inflation rate was not far from historical highs.

Despite the current problems, companies participating in the PMI survey are still optimistic about the next year, and 62% of companies expect output to increase.

Three factors support the pound

Citibank economists emphasized the three factors that currently support the pound. In addition, the pound is bound to rise due to the expected increase in interest rates by the Bank of England.

The current factors supporting the pound include the decrease in the number of hospitalizations for the British coronavirus: from the perspective of valuation and economic normalization after the new crown pneumonia, British assets are attractive; the political risks of the EU and the UK negotiating the Northern Ireland agreement are fading, and the short-term There will be no referendum on Scottish independence.

As the Bank of England lowered the threshold for raising interest rates as early as November 2021 at its September meeting, the British pound may receive an additional boost from the UK's monetary policy outlook, which is currently ahead of the Federal Reserve. Vantage point.

GBP/USD technical analysis

GBP/USD ushered in the second consecutive day of gains, and is currently under pressure near the 5-day moving average.

If it can break through the 10-day moving average of 1.3601, the bulls are expected to temporarily get rid of the downward pressure and open the door to the 20-day moving average of 1.3705, and then the 50-day moving average of 1.3771 is worthy of attention.

If the bears counterattack, the support will first look to the September 29 low of 1.3412, and then you can focus on the support at 1.3312 and 1.3188.

(The British pound against the U.S. dollar daily chart)

At GMT+8 21:11, the pound was quoted at 1.3543 against the US dollar.