GBP/USD: Trading the British Services PMI Aug. 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: 57.4

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

Published on Tuesday 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  June release  rose to 58.5 points,  above the estimate of 57.4 points. The markets are expecting another strong release for July, with an estimate of 58.1 points.

Sentiments and levels

With the US economy showing some strong numbers for Q2, speculation remains high that rates will rise, perhaps as early as September. British data has been respectable, helping the pound gain ground against the greenback. So, the overall sentiment is  neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5909, 1.5769, 1.5682, 1.5590, 1.5485 and 1.5341.

5 Scenarios

1. Within expectations: 55.0 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 64.0: An unexpected higher reading can send the pair above one resistance line.
3. Well above expectations: Above 64.0: Such an outcome would likely prop up the pound, and a second resistance line might be broken as a result.
4. Below expectations:  52.0 to 54.9: A  lower reading  than forecast could  push GBP/USD downwards  and break  one level of support.
5. Well below expectations: Below 52.0: A  figure pointing to  weak expansion or even contraction 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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