The 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.
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Thursday at 9:30 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 October release improved to 54.9 points, above the forecast of 54.6 points. The markets are expecting more of the same in the upcoming release, with an estimate of 55.1 points.
Sentiments and levels
With the Federal Reserve likely to raise rates at this month’s meeting, the greenback could pile up further gains against the pound, even if this week’s Nonfarm Payrolls is soft. With the BOE saying it has no plans to raise rates in the near future, monetary divergence will continue to favor the US dollar. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5341, 1.5269, 1.5163, 1.5026, 1.4856 and 1.4752
5 Scenarios
- Within expectations: 55.0 to 62.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 62.1 to 66.0: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 66.0: Such an outcome would likely prop up the pound, and a second resistance line might be broken as a result.
- Below expectations: 51.0 to 54.9: A sharper decrease than forecast could push GBP/USD downwards and break one level of support.
- Well below expectations: Below 51.0: In this scenario, the pair would likely drop, possibly breaking a second support level.
For more about the pound, see the GBP/USD forecast.
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