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 manufacturing conditions in the UK. A reading which is higher than the market forecast is bullish for the pound.
Update: UK Services PMI falls to 55.8 – new low for GBP/USD
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 show strong growth, with recent releases close to the 60-point level. The November reading came in at 58.6 points, easily beating the estimate of 56.6 points. Another strong reading is expected, with the December estimate standing at 58.9 points. Will the index match or beat the prediction?
Sentiments and levels
With the pound taking a dive on Friday, we could be in for an upward correction. At the same time, the dollar starts 2015 with strong momentum as its rivals are in retreat. Divergence will continue to weigh on the pound, as the Federal Reserve is expected to raise rates while the BOE has backtracked somewhat from tightening. Thus, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5539, 1.5416, 1.5290, 1.5114 and 1.5008.
5 Scenarios
- Within expectations: 56.0 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 well above one resistance line.
- Well above expectations: Above 66.1: The chances of a sharp expansion are low. Such an outcome would prop up the GBP, and a second resistance line might be broken as a result.
- Below expectations: 52.0 to 55.9: A weak reading than forecast could push GBP/USD downwards and break one level of support.
- Well below expectations: Below 51.9: Such a scenario would likely push the pair downwards, possibly breaking a second support level.
For more about the pound, see the GBP/USD.
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