Global macro overview for 01/10/2018
September’s PMI index for the British industrial sector pointed to an increase to 53.8 from 53 in August after correction, while it was expected to fall to 52.5. The data is primarily in contrast to the gloomy readings from Euroland, however, the GBP does not find any impulse for growth in the report. First of all, the industrial sector is not large in the UK, where 75% of GDP generates services. Secondly, the Brexit issue now counts for the pound, where there has been no progress in negotiations recently.
In the other news, GBP remains sensitive primarily to information about the Brexit agreement and today another surprise bargains. The financial media quotes a representative of the British administration, according to which the London government is preparing a compromise solution on the rules of the flow of goods on the border between Ireland and Northern Ireland. This is the most sensitive topic for both sides of the negotiations, so the chances of agreement on this issue significantly increase the probability of a final settlement.
Let’s now take a look at the GBP/USD technical picture at the H4 time frame after the data were published. At first the market tried to rally higher and broke above the local technical resistance at the level of 1.3107 and made a local high at the level of 1.3115, which was just above the 50% Fibo retracement. But then, the bears took contol over the market nad now the price is falling towards the support around the level of 1.3000. The market conditions are oversold, but the negative and weak momentum support the short-term bearish outlook.