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UK Manufacturing Shrinks and Pound Under Pressure

Binary.com Daily Financial Review August 2nd 2016

UK Manufacturing ShrinksMorning Report: 09.30 London

  • UK manufacturing shrinks so this morning the British pound remains under pressure following worse than expected UK manufacturing PMI yesterday. It is one of the first real post-Brexit data points and the initial signs are not good. The pound has continued to underperform the euro and made further losses against the yen. It’s notable that these losses have been controlled, possibly due to traders holding off on larger positions on the pound until the Bank of England meeting on Thursday.

UK Manufacturing Shrinks

UK Manufacturing Shrinks

  • Elsewhere, the US dollar is pulling back after US ISM manufacturing also dropped more than expected.

UK Manufacturing Shrinks

  • Meanwhile, the yen and yen pairs are on the back foot.

UK Manufacturing Shrinks

  • On a positive front, the Australian and New Zealand dollar are on the rise after the RBA kept rates on hold.

UK Manufacturing Shrinks

UK Manufacturing Shrinks

Coming up today:

  • Coming up today, we have UK construction PMI at 09.30.
  • Following this, we get US core PCE price index and personal spending at 13.30.

Trade Idea:

  • Markets appear to be pricing in at least one rate cut for the British pound, putting pressure on the GBP/JPY. The question is – where does the BOE go from here? Given recent data points, it could well be lower.

UK Manufacturing Shrinks

 

A good way to play this is a LOWER trade predicting that the GBP/JPY will close below 134 in 14 days for a potential return of 123%

UK Manufacturing Shrinks

fed sets course

N.B. This financial market report is intended for educational and information purposes only. It should not be construed as investment or financial advice and you should not rely on any of its content to make or refrain from making any investment decisions. The views expressed in this report are those of the author and do not necessarily reflect the views or position of Binary.com. Binary.com accepts no liability whatsoever for any losses incurred by users in their trading. Binary options trading may incur losses as well as gains.

 

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