GBP/USD: Trading the British Services PMI Sep. 2015

British  Services PMI (Purchasing Managers’ Index) is  based on a survey of purchasing managers in  the  services sector. Respondents are surveyed for their view of the economy and business conditions in the UK.  A reading which is higher than the market forecast is bullish for the pound.

Update:  UK services PMI only 55.6 – GBP/USD falls

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Thursday at 8:30 GMT.

Indicator Background

Market analysts are always interested in the views of purchase managers on the economy, as the latter are considered to be attuned to the latest economic and financial developments, and their expectations could be an indication of future economic trends.

The index continues to post figures  well above the 50 level, pointing to continuing expansion in the services sector. The  July release  came  slipped to 57.4 points, short of the estimate of 58.1 points. The markets are expecting more of the same in the August release, with a forecast of 57.6 points.

Sentiments and levels

The Chinese crisis has exposed the weakness of the pound, which plunged last week after indecisive movement for much of the summer. The US economy remains on track, and any signs of a rate hike from the Fed will could cause further headaches for the shaky pound.  So, the overall sentiment is  bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5590, 1.5485, 1.5341, 1.5269, 1.5163 and 1.5026.

5 Scenarios

1. Within expectations: 53.0 to 61.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 61.1 to 65.0: An unexpected higher reading can send the pair above one resistance line.
3. Well above expectations: Above 65.0: Such an outcome would likely prop up the pound, and a second resistance line might be broken as a result.
4. Below expectations:  50.0 to 52.9: A  reading at the  50 level or slightly higher  could  push GBP/USD downwards  and break  one level of support.
5. Well below expectations: Below 50.0: A  reading in negative territory  would point to  contraction in the services sector. This would likely push the  pair downwards, possibly breaking a second support level.

For more about the pound, see the GBP/USD forecast.

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