UK construction PMI preview: What to expect of GBP/USD?

The UK economy will release its October construction PMI later in the European session, with the figure expected to drop, although remain into expansion territory, with a 51.8 print predicted versus previous 52.3 result.

The UK construction sector activity is expected to stall its recovery mode in Oct as jitters surrounding the timing of Article 50, as announced by May, could have weighed on investors’ sentiment. Focus remains on the new orders volumes and employment numbers.

Should the PMI reading surprise to the upside, we could see GBP/USD rebounding above 1.22 handle. Contrarily, the cable could test 1.2200 levels on disappointing results. However, the reaction to the data may be short-lived as the main driver for the pound remains the FOMC decision due later in the NA session.

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 10 and 45 pips in deviations up to 2 to -1.5, although in some cases, if notable enough, a deviation can fuel movements of up to 65 pips.

GBP/USD: Technical levels

The Research Team at Danske Bank notes, “(GBPUSD) Backed off the 1.2280 high to leave the 1.2300 level and 1.2332 recent high out of reach. Would need lift over the latter to trigger stronger recovery to the 1.2400 level and 1.2472. Failure to hold the 1.2200 level will expose the 1.2114 and 1.2083 lows to retest. ”