London, England, Industrial automated robot machinery in an industrial workshop factory environment. Image source: Daniel Timothy Allison © 123RF.com
UK's manufacturing PMI was revised higher to 55.1 index points in February, says the Markit institute. This performance surpassed the initial market forecasts, which were anticipating the index to remain unchanged at January's 54.9 index points.
Output was revealed to have risen at the weakest pace in over nine months, whereas new orders grew. Overall, Britain's industry continues to stabilise; however, the rate of recovery is uneven across different sectors.
UK Manufacturing PMI. Image source: TradingEconomics.com
The manufacturing sector is likely to remain on this positive trend of expansion in the following months given the rebound in global demand. New manufacturing orders are growing in the U.S. as well, which illustrates this stabilisation of demand.
The British economic activity is picking up amidst the steady vaccine-rollout in the UK and elsewhere, allowing governments to ease their pandemic restrictions. Investors' sentiment has already registered these positive developments for the global economy.
Uncertainty remains substantial but decreasing. This is exemplified by the rising investors' interest in riskier assets, which is easing the demand for lower-risk securities. As a consequence, the yields of the mid-term U.S. Treasury Notes is finally picking up.
These economic developments have started to exert pressure on the British pound, which was greatly advantaged by the prevalent uncertainty until recently. However, as the latter falls, so does the demand for the U.S. dollar grow.
As can be seen on the hourly chart below, the GBPUSD has finally started developing a new downtrend. The underlying price action established a minor throwback to the psychologically significant resistance level at 1.40000 (from below) and looks poised to continue depreciating in the short-term.
The MACD indicator underpins the steadily growing bearish momentum in the market, whereas the price action remains concentrated below the 50-day MA (in green) and the 100-day MA (in blue). Both of these factors elucidate the growing selling bias in the market.
The next target for the currently developing downtrend is encompassed by the major support level at 1.38500.
GBPUSD 1H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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