Home GBP/USD: Trading the UK Services PMI

GBP/USD: Trading the UK Services PMI

UK  Services PMI 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.

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

Published on Wednesday 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.

Services PMI dipped to 53.3 in February, shy of the forecast of 54.2 points. Little change is expected in March, with an estimate of 53.5 points.

Sentiments and levels

The US economy continues to fire on all cylinders, and the Fed is expected to hike rates two more times in 2017. The UK has weathered Brexit fairly well, but bad blood between the UK and the EU could chill negotiations over Brexit and hurt the pound. So, the overall sentiment is  bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.2860, 1.2775, 1.2548, 1.2345, 1.2213 and 1.2080

5 Scenarios

  1. Within expectations: 50.0 to 58.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 58.1 to 62.0: An unexpected higher reading can send the pair above one resistance line.
  3. Well above expectations: Above 62.1: Such an outcome would likely prop up the pound, and a second resistance line might be broken as a result.
  4. Below expectations:  46.0 to 50.9: A soft reading could  push GBP/USD downwards  and break  one level of support.
  5. Well below expectations: Below 46.0: A reading  pointing to  significant contraction could push  the pair  below a second support level.

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

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.