At the level of 53.9 points, the UK manufacturing PMI index is now on the lowest levels it has been since late 2016 - and unlike a large part of recent UK macroeconomic data, we can't blame the weather this time. With new orders reportedly growing more slowly, it's possible that the combination of a slowdown in Eurozone economic activity and a slightly stronger pound are beginning to influence the other economies.
Manufacturing only makes up around 10% of the UK economy, so it will be Thursday's services PMI that will have a much greater bearing on Bank of England policy. Regardless of the final outcome, the interest rate hike this May from the Bank of England is now even further off the table as there is not enough macroeconomic justification for such a move.
Let's now take a look at the GBP/USD technical picture at the H4 time frame. The technical support at the level of 1.3711 has been broken and the market has made the new local low at the level of 1.3666.The market conditions are now extremely oversold, moreover, there is a clear bullish divergence between the price and the momentum present at this time frame. Both of this clues are indicating a possible corrective pull-back towards the level of 1.3711 or even 1.3780.
