June 4 – Economic Events Outlook – All Eyes on UK Construction PMI - Forex News by FX Leaders

June 4 – Economic Events Outlook – All Eyes on UK Construction PMI

Posted Monday, June 4, 2018 by
Arslan Butt • 2 min read

The UK Construction PMI seems to be the only economic event that could cause market fluctuation today. Additionally, there could be volatility today as most investors will be looking to price in the US labor market figures which were released on Friday. So, the dollar is likely to remain supported.

Watchlist – Top Economic Event

In the absence of market-moving economic events, investors usually trade the most recent high impact economic event. It’s Monday morning, so our only option is the US labor market data.

On Friday, the US employment report was quite surprising because the unemployment rate slid to 3.8% from a forecasted 3.9%. Also, the U.S. economy added 223K jobs, compared to an estimated 189K. Despite the surprising data, the dollar didn’t strengthen much because most of the positive data was already priced in.

In the absence of any top-tier economic event, investors may start pricing in the US labor report.

Great Britain Pound – GBP

Construction PMI – A leading indicator of economic health. Businesses react quickly to market conditions, and their purchasing managers hold the most current and relevant insight into the company’s view of the economy. This typically drives 30 – 50 pips into the market.

Looking at the forecast, the constructions PMI seems to show a slight drop from 52.5 to 52. But, despite a weaker forecast, we can’t expect a dip in sterling as the PMI figures are compared with a benchmark of 50. Above this, the economy is growing. Nevertheless, it will be exciting to trade any figure below 50 today.

GBP/USD – Bullish Channel In Play

Let me draw your attention towards a bullish channel setup on the hourly timeframe. The Cable is trading right below the upper trendline resistance level of $1.3375. You can see a candlestick pattern ‘tweezers top‘ which is a bearish pattern in nature.

GBP/USD - Hourly Chart - Bullish Channel

GBP/USD – Hourly Chart

The RSI and Stochastics are in the overbought area, implying that the market is already at the top and sellers may dominate the market for correction.

GBP/USD –  Key Trading Levels

Support     Resistance

1.3343           1.3357

1.3339           1.3361

1.3332           1.3368

Key Trading Level: 1.335

GBP/USD – Trading Plan

Investors are advised to keep a close eye on the small trading range from $1.3350 to $1.3375. The idea is to stay bullish above $1.3375 and bearish below $1.3350, to target 50 pips on both sides. Let me add, the breakout is likely to be at 8:30 (GMT) when the Markit releases the construction PMI data.

Keep following for forex trading signals and updated trade ideas. Good luck!

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies

About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
Related Articles
Comments

Leave a Reply

avatar
  Subscribe  
Notify of