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 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.
Services PMI dropped sharply in a special (post-Brexit) release in late July. The index slipped to 47.4 points, indicating contraction in the services sector. An identical reading is expected in the July release.
Sentiments and levels
With the Brexit fallout affecting the British economy, the BoE is expected to lower rates this week to 0.25%, which be a historic low. Even though this move has been priced in, a rate cut will be a major event and could result in the pound losing ground. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.3514, 1.3419, 1.3276, 1.3142, 1.3064 and 1.2902
5 Scenarios
- Within expectations: 44.0 to 51.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 51.1 to 55.0: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 55.1: Such an outcome would likely prop up the pound, and a second resistance line might be broken as a result.
- Below expectations: 40.0 to 43.9: A soft reading could push GBP/USD downwards and break one level of support.
- Well below expectations: Below 40.0: A reading pointing to significant contraction would push the pair below a second support level.
For more about the pound, see the GBP/USD forecast.
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