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 improved to 52.9 in August, beating the estimate and marking a 4-month-high. The estimate for the September release is 52.1.
Sentiments and levels
Although recent UK data has been decent, the markets remain braced for some weak numbers in the third quarter due to Brexit. The BoE dropped broad hints in September that it plans to lower rates in November. In the US, it’s the opposite story, as the Fed appears inclined to raise rates in December if key numbers remain steady. This monetary divergence is bullish for the US dollar. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.3247, 1.3112, 1.3020, 1.2902, 1.2778 and 1.2612
5 Scenarios
- Within expectations: 49.0 to 55.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 55.1 to 59.0: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 59.1: Such an outcome would likely prop up the pound, and a second resistance line might be broken as a result.
- Below expectations: 44.0 to 48.9: A soft reading could push GBP/USD downwards and break one level of support.
- Well below expectations: Below 44.0: 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.
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