When is the UK Services PMI and how could it affect GBP/USD?
|The UK Services PMI overview
The UK economy will release its October Services PMI later in the European session at 0930 GMT, which is expected to come in at 49.7, down from September’s 49.5 reading.
Analysts at TD Securities noted, “we look for the services PMI to dip slightly further into contraction territory at 49.2 in October (mkt 49.7). While the manufacturing PMI managed to bounce a bit on an inventory building ahead of the 31 October deadline, as it did in March 2019, the services PMI actually performed the worst out of the three PMIs in March, so we think has a bit more downside potential now.”
Deviation impact on GBP/USD
Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 50 pips in deviations up to 2.5 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.
How could affect GBP/USD?
Haresh Menghani, Analyst at FXStreet explains: “Nothing seems to have changed much the pair and bulls are likely to wait for a sustained move beyond the key 1.30 psychological mark before positioning for any further near-term appreciating move. Above the mentioned handle, the pair is likely to extend the momentum further towards the 1.3065-70 intermediate resistance ahead of the 1.3100 round-figure mark and late April swing highs near the 1.3175 region. Ahead of the key pivotal point, the 1.2925-30 region is likely to act as immediate strong resistance.”
“On the flip side, immediate support is pegged near the 1.2865 region (200-hour EMA), which if broken might turn the pair vulnerable to accelerate the slide back towards the 1.2800 round figure mark. Failure to defend the said handle now seems to pave the way for an extension of the slide further towards the 1.2710-1.2700 region with some intermediate support near mid-1.2700s,” Haresh adds.
Key Notes
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About the UK Services PMI
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. Traders want the highest possible reading as that will be taken as positive for the GBP. Any reading above 50 signals expansion, while a reading under 50 shows contraction.
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