When are the UK Preliminary PMIs and how could it affect GBP/USD?

Dhwani Mehta FXStreet

The UK PMIs overview

The first Preliminary readings of the UK Manufacturing and Services PMIs are due for release today at 0930GMT.

The Preliminary UK Manufacturing PMI is expected to show that the pace of contraction in the activity quickened in November after rebounding to six-month highs in October. The index is expected to arrive at 49.0 versus 49.6 last.

Meanwhile, the flash UK Services PMI is expected to steady at 50.00 in November.

How could they affect GBP/USD?

The Cable continues to hold the higher ground above the 1.2900, in the wake of increasing odds of a majority for the ruling Conservatives Party in the Dec 12 polls while a broadly subdued US dollar amid mixed trade cues also underpins the Cable. The immediate focus now shifts towards the UK Manufacturing PMI data release.

Should the data suggest a bigger-than-expected drop, the spot is likely to come under fresh selling pressure, dragging the rates back below 1.2900/ 1.2898 (round number/ 10-DMA), below which 1.2845 (Oct 30 low) could be targeted.

However, on a positive surprise, the GBP/USD pair could take-out the 1.2928 5-DMA resistance, above which 1.3000 (psychological level) could be tested en route 1.3014 (Oct highs).

Key Notes

PMI releases, Lagarde's speech amongst market movers today – Danske Bank

GBP Futures: scope for a correction lower

GBP/USD Forecast: Going nowhere in a hurry, UK/US PMIs eyed for some impetus

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 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.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold hangs near one-week low; looks to FOMC Minutes for fresh impetus

Gold is consolidating just above the $4,850 level, having touched a one-week low on Tuesday, amid mixed cues. Signs of progress in US–Iran talks dent demand for the traditional safe-haven bullion. Meanwhile, rising bets for more Fed rate cuts keep the US Dollar bulls on the defensive and act as a tailwind for the non-yielding yellow metal. Traders also seem reluctant ahead of the FOMC Minutes, which would offer cues about the Fed's rate-cut path and provide some meaningful impetus.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.