GBP/USD: Trading the UK Services PMI April 2014

British Services PMI is based on a survey of Purchasing Managers in the services industry. The survey asks respondents for their view of a wide range of business conditions, including employment, new orders, prices and inventories. 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 Thursday at 8:30 GMT.

Indicator Background

UK Services PMI has been losing ground since October, raising concerns about the health of the British services sector. The February reading came in at 52.8 points, and no change is expected in the upcoming reading.

Sentiments and levels

GBP/USD reversed directions and posted strong gains, recovering the losses sustained a week earlier. Which British pound will show up this week? Much will depend on the PMI releases, which remain strong but have tapered off somewhat. In the US, the markets will be keeping a close eye on employment releases, highlighted by Nonfarm Payrolls. So, the overall sentiment is neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6990, 1.6823, 1.6705, 1.66, 1.6475 and 1.6343.

5 Scenarios

  1. Within expectations: 50.0 to 56.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 56.1 to 60.0: An unexpected higher reading can send the pair well above one resistance line.
  3. Well above expectations: Above 60.0. The likelihood of a sharp expansion is low. Such an outcome could prop up the GBP, and a second resistance line might be broken as a result.
  4. Below expectations: 47.0 to 49.9: A reading below the 50-point level indicates contraction, and could push the pound below one support level.
  5. Well below expectations: Below 47.0: A very weak reading could push see GBP/USD break through a second support level.

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

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