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

The British Services  PMI (Purchasing Managers’ Index) is  based on a survey of purchasing managers in  the  services sector.  A reading which is higher than the market forecast is bullish for the pound.

Update:  UK services PMI jumps to 58.9 points

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

Published on Tuesday 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.

Services PMI  continues to trade well above the 50-point level, indicative of steady expansion in the services sector.  The index came in at  56.7 points in February, shy of the forecast of 57.6 points. The estimate for the March report stands at 57.1 points.

Sentiments and levels

Despite a dismal job report out of the US late last week,  the dollar  managed to hold its own against the pound. This demonstrates that dollar sentiment remains strong against its major rivals, including the pound. If US releases  bounce back this week, we could see the pound lose ground. So, the overall sentiment is  bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5296, 1.5114, 1.5008, 1.4813, 1.4621 and 1.4521.

5 Scenarios

1. Within expectations: 54.0 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 could send the pair above one resistance line.
3. Well above expectations: Above 65.1: The chances of a sharp expansion are low. Such an outcome  could push  the pound higher, and a second resistance line might be broken as a result.
4. Below expectations:  50.0 to 53.9: A weaker reading  than forecast could  push GBP/USD downwards  and break  one level of support.
5. Well below expectations: Below 50.0:  A reading below the 50-point  level would  indicate contraction and could result in the pair breaking below a second support level.

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

To follow this event live:   [do action=”calendar-event” eventid=”a26781f0-50cd-4a99-80f2-f6b1d38374d8″/]