When is the UK Services PMI and how could it affect GBP/USD?
The UK Services PMI overview
The UK economy will release its August Services PMI later in the European session at 0830 GMT, which is expected to come in at 51.0, down from July’s 51.4 reading.
In the view of the analysts at TD Securities, “while the services PMI managed to gain some ground in July, it's difficult to see any real upward momentum given the growing uncertainty from Brexit and from global trade tensions. We look for the services PMI to fall back to its June level of 50.2, below market consensus of 51.0.”
Deviation impact on GBP/USD
Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 50 pips in deviations up to 2.5 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.
How could affect GBP/USD?
Haresh Menghani, Analyst at FXStreet explains: “Given that technical indicators on the 1-hourly chart have been gaining strong positive traction, the pair seems all set to build on its recovery move and aim towards testing 100-hour SMA resistance near the 1.2130-35 region – also coinciding with 50% Fibo. level. Subsequent recovery could further get extended towards the next confluence barrier near the 1.2165-75 region – comprising of 61.8% Fibo. level and 200-hour SMA.”
On the flip side, the 1.2100 round figure mark now seems to protect the immediate downside and is closely followed by support near the 1.2075 region, which if broken decisively might negate prospects for any further recovery and turn the pair vulnerable to slide back towards challenging the 1.20 handle,” Haresh adds.
At the press time, the Cable is extending its recent bullish momentum above the 1.21 handle, testing daily tops near 1.2150 region. Despite the data, the UK currency will continue to take cues from the Brexit developments and the testimony from BOE’s Carney, Haldane, and Vlieghe on the August Inflation Report before the Treasury Select Committee.
Key Notes
UK PM Johnson tabled a Commons motion today to hold a general election - FT
UK Labour’s Starmer: Johnson is setting a trap on election timing
Pound jumps on rising hope of no-deal Brexit as BoJo gets defeated on Tuesday vote
About the UK Services PMI
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. Traders want the highest possible reading as that will be taken as positive for the GBP. Any reading above 50 signals expansion, while a reading under 50 shows contraction.