How to trade the UK Services PMI with GBP/USD

Markit's Services PMI is a critical forward-looking indicator for the economy and moves the pound.
The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
The GBPUSD moved, on average, 8 pips in the 15 minutes after the data release and 31 pips in the following 4 hours

Yohay Elam FXStreet

Buying GBP/USD Scenario

Tradable Positive Trigger: +1.03 deviation (55.31 ) [BUY Pair]
Key Resistance Level: 1.2940

This time, if it comes out at higher than expected with a relative deviation of 1.03 or higher(55.31 or higher in actual terms), the pair may go up reaching a range of 26 pips in the first 15 minutes and 76 pips in the following 4 hours.

1.2850 provided support to the pair in late August. Further up, 1.2940 is the gap line in early September and also capped the pair beforehand. 1.2980 supported cable when it traded on higher ground.

Selling GBP/USD Scenario

Tradable Negative Trigger: -0.79 deviation (52.81) [SELL Pair]
Fundamental Support Level: 1.2760

If it comes out lower than expected at a relative deviation of -0.79 or less(52.81 or lower in actual terms), the GBPUSD may go down reaching a range of 33 pips in the first 15 minutes and 81 pips in the following 4 hours.

1.2800 is a round number that served as support in late August. 1.2760 held the pair down in mid-August when it traded on lower ground. 1.2662 is the 2018 low.

GBP/USD Levels on the Chart

GBP USD Technical analysis September 5 2018

More data

The services sector is the largest one in the UK and consists of financial services. The forward-looking surveys for the manufacturing and construction sectors came out below expectations, but services may go both ways.

In the last five releases, the GBPUSD moved, on average, 8 pips in the 15 minutes after the data release and 31 pips in the following 4 hours. The previous release had a negative surprise of -0.87 in terms of relative deviation and the GBPUSD reached a 5 pip range in the first 15 minutes and a range of 54 pips 4 hours thereafter.

Follow the publication of the figure on the economic calendar. Watch out for the data from the Market Impact tool, projecting the potential price changes according to the deviation. Here is the Market Impact Studies Users Guide.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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