Global macro overview for 01/02/2016:
The PMI Manufacturing data from the eurozone was released this morning and it was mostly in line with analysts' expectations. The biggest surprise however was the UK PMI which came in better than expected: 52.9 vs. 51.8 and (forecast 52.2). The UK PMI remained above the neutrality level of 50.0 for 34 successive months now. Looking beneath the surface of the headline numbers shows that the prime drivers of the output growth acceleration were the consumer and investment goods sectors. A solid rate of expansion was also signaled by intermediate goods producers. In conclusion: the UK manufacturing sector posted an up tick in its rate of expansion at the beginning of 2016, shrugging off a number of potential headwinds, ranging from global financial market volatility to localized flooding in the North of the country. The domestic market remains the key driver of the economic growth, but after recent easing in the exchange rate, a number of manufacturers are still finding that the strength of the pound against the euro significantly influence the number of orders.
From the technical point of view, the recent downside breakout of the rising wedge was successful with new daily low reached at the level of 1.4147. Currently, the market is testing the lower channel line from the downside and any failure to break back above the level of 1.4317 will result in immediate reversal. The downtrend is still intact.