UK manufacturing production preview: What to expect of GBP/USD?

The UK industrial and manufacturing production data for the month of December are scheduled for release at 09.30 GMT in the European session ahead.

Industrial production to come in mixed for Dec

The manufacturing production, which makes up around 80% of total industrial production, is expected to decline to 0.5% on monthly basis in Dec, against a 2.1% growth seen in Nov. Meanwhile, the total industrial production is predicted to remain positive, although slow its pace of expansion dramatically to 0.2% m/m in Nov, as compared to a 2.1% increase recorded previously.

The event may cause quite a stir in GBP markets, as the aforementioned data would be the first major economic release of this week. A better-than expected print could provide extra legs to the recovery in cable above 1.25 handle, while, GBP/USD could fall back towards 1.2420-00 band should the data come in much weaker-than expected.

Deviation impact on GBP/USD

 Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 20 and 35 pips in deviations up to 1.5 to -2.2, although in some cases, if notable enough, a deviation can fuel movements of up to 60 pips.

GBP/USD technical levels to watch

Haresh Menghani, Analyst at FXStreet noted, “Although the pair has struggled to build on to its recent gains, it has managed to hold above converging 100-day & 50-day SMAs support area near 1.2450-30 region. Hence, only a decisive break below this important support would negate any near-term bullish bias and turn the pair vulnerable to head back towards testing weekly lows support near 1.2350-45 region, with 1.2400 round figure mark acting as intermediate support.”

“On the flip side, the pair has failed to attract any follow through buying interest above 1.2550 immediate resistance. However, with short-term technical indicators in bullish territory, a convincing break through this immediate barrier, leading to a subsequent move through 1.2580 resistance, has the potential to lift the pair beyond 1.2600 handle, towards its next important resistance near 1.2655-60 area,” Haresh added.