The British Services PMI (Purchasing Managers’ Index) is based on a survey of purchasing managers in the services sector. Of the three British PMI reports, Services PMI is considered the most important. 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 Friday at 8:30 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 post readings well above the 50 level, pointing to continuing expansion in the services sector. However, the May release slipped to 56.5 points, short of the estimate of 59.2 points. The markets are expecting a rebound in the June report, with an estimate of 57.4 points.
Sentiments and levels
After a strong rally for most of June, the pound posted sharp losses last week. The FOMC may be slightly more hawkish than perceived, as a Fed policymaker spoke of one or even two rate hikes in 2015. If there are further hints about a rate hike in the US, the greenback could jump higher. As well, the severe crisis over Greece’s debts is weighing on the pound, as the UK has close economic and political ties with the continent. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5909, 1.5746, 1.5682, 1.5590, 1.5485 and 1.5341.
5 Scenarios
- Within expectations: 54.0 to 61.0: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 61.1 to 65.0: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 65.0: Such an outcome would likely prop up the pound, and a second resistance line might be broken as a result.
- Below expectations: 50.0 to 53.9: A sharper decrease than forecast could push GBP/USD downwards and break one level of support.
- Well below expectations: Below 50.0: A reading pointing to contraction could push the pair downwards, possibly breaking a second support level.
For more about the pound, see the GBP/USD.
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