When are the UK Preliminary PMIs and how could it affect GBP/USD?
|The UK PMIs overview
The first Preliminary readings of the UK Manufacturing and Services PMIs for April are due for release today at 0830GMT.
The Preliminary UK Manufacturing PMI is expected to show that the contraction in the manufacturing sector activity deepened in April. The index is expected to arrive at 42.0 versus 47.8 last.
Meanwhile, the flash UK Services PMI is expected to drop to 29.0 in April vs. 34.5 booked in March.
How could they affect GBP/USD?
The Cable extends the recovery mode above 1.2350, up 0.27% so far. The gains could likely be associated with a broad-based US dollar retreat, as the market mood improves on the oil-price rebound and lockdown easing hopes. The immediate focus now remains on the UK Manufacturing and Services PMI releases.
FXStreet’s Senior Analyst, Yohay Elam, offers key technical levels for trading GBP/USD in the day ahead. “The Technical Confluences Indicator is showing that cable is capped by strong resistance 1.2344, which is the convergence of the previous 4h-high, the Fibonacci 38.2% one-day, the Simple Moving Average 5-4h, and the Bollinger Band 1h-Middle. Further up, the next cap is 1.2389, which is the meeting point of two Pivot Points, the one-week Support 1 and the one-day R1.”
“Support awaits at 1.2319, which is the confluence of the SMA 10-4h, the Fibonacci 61.8% one-day, and the BB 15min-Lower. Stronger support is at 1.2280, which is where the previous daily low, the PP one-day Support 1, and the PP one-week S2,“ he adds.
Key notes
UK PMIs Preview: Without light at the end of the tunnel, the only way is down, GBP/USD may fall
GBP/USD: A move to 1.2165 remains on the cards – UOB
UK economy set for the biggest quarterly contraction since World War 2 – Reuters poll
About the UK PMIs
The Manufacturing Purchasing Managers Index (PMI) released by both the Chartered Institute of Purchasing & Supply and the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the UK. A result above 50 signals is bullish for the GBP, whereas a result below 50 is seen as bearish.
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.
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