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 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 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.
The index continues to post figures well above the 50 level, pointing to continuing expansion in the services sector. The December release improved to 55.9 points, above the estimate of 59.1 points. The estimate for the January report stands at 55.6 points.
Sentiments and levels
The US dollar remains the market’s darling after the Fed rate hike in December. The Fed is set to raise rates again early in the New Year, while any BOE plans to raise rates are on hold, perhaps until 2017. This monetary divergence and a strong US economy favor the dollar continuing to make gains against the pound, which many analysts believe is overvalued and ripe for heading south. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5163, 1.5026, 1.4856, 1.4752 and 1.4562
5 Scenarios
- Within expectations: 52.0 to 59.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 59.1 to 63.0: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 63.1: Such an outcome would likely prop up the pound, and a second resistance line might be broken as a result.
- Below expectations: 48.0 to 51.9: A weaker reading than forecast could push GBP/USD downwards and break one level of support.
- Well below expectations: Below 48.0: A poor reading would likely push the pair downwards, possibly breaking a second support level.
For more about the pound, see the GBP/USD.