The UK PMIs overview
The first Preliminary readings of the UK Manufacturing and Services PMIs are due for release today at 0930GMT.
The Preliminary UK Manufacturing PMI is expected to show that the pace of contraction in the activity quickened in November after rebounding to six-month highs in October. The index is expected to arrive at 49.0 versus 49.6 last.
Meanwhile, the flash UK Services PMI is expected to steady at 50.00 in November.
How could they affect GBP/USD?
The Cable continues to hold the higher ground above the 1.2900, in the wake of increasing odds of a majority for the ruling Conservatives Party in the Dec 12 polls while a broadly subdued US dollar amid mixed trade cues also underpins the Cable. The immediate focus now shifts towards the UK Manufacturing PMI data release.
Should the data suggest a bigger-than-expected drop, the spot is likely to come under fresh selling pressure, dragging the rates back below 1.2900/ 1.2898 (round number/ 10-DMA), below which 1.2845 (Oct 30 low) could be targeted.
However, on a positive surprise, the GBP/USD pair could take-out the 1.2928 5-DMA resistance, above which 1.3000 (psychological level) could be tested en route 1.3014 (Oct highs).
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About the UK PMIs
The Manufacturing Purchasing Managers Index (PMI) released by both the Chartered Institute of Purchasing & Supply and the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in UK. A result above 50 signals is bullish for the GBP, whereas a result below 50 is seen as bearish.
The PMI service released by both the Chartered Institute of Purchasing & Supply and the Markit Economics is an indicator of the economic situation in the UK services sector. It captures an overview of the condition of sales and employment. It is worth noting that the UK service sector does not influence, either positively or negatively, the GDP as much as the Manufacturing PMI does.