The European PMI Manufacturing data has surprised the market participants, because the data wasn't that good as expected. Spanish PMI was released at the level of 55.8 points, while the market participants expected 56.4 pints (56.1 prior). Italian PMI was weaker as well as it was released at the level of 57.4 points, while the market participants expected 58.6 points. Even French PMI disappointed, as it was posted at the level of 58.8, lower than last time level of 59.3 and below the expectations. Only German PMI was released in line with expectations. Nevertheless, the PMI Manufacturing for the whole Eurozone remained at the level of 60.6 points, as expected. Overall, the PMI in the Eurozone is still on very elevated levels, so the sentiment remains strong. The PMI in Germany is the highest result in more than 20 years of research history. Historical records have also been recorded in Austria and Ireland, as well as in the entire euro area.
The PMI indicator illustrates the economic situation in the manufacturing sector. It is developed on the basis of a survey conducted every month among managers responsible for logistics. It is calculated on the basis of five sub-indices: new orders, production, employment, delivery time and inventory of items purchased. Each value of the main indicator above 50.0 means a general improvement of the conditions in the sector (expansion) and each value of the main indicator below 50.0 means a general deterioration of the conditions in the sector (contraction).
Let's now take a look at the EUR/GBP technical picture at the H4 time frame after a disappointing data from the UK PMI Manufacturing (56.3 vs. 58.0 expected, 58.2 prior). The market rallied to the 78% Fibo at the level of 0.8919, but currently reversed and now is testing the technical support at the level of 0.8889.There is a clear bearish divergence between the price and the momentum indicator, so the downward move might occur anytime soon.
