UK services PMI overview
The UK economy will release its May services PMI later in the European session at 0830GMT, which is forecast to drop to 55.0 from April’s 55.8.
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 notes: “On the economic data front, the release of UK services PMI would again be largely ignored as traders shrugged off last week’s upbeat PMI prints (manufacturing and construction PMIs). Weakness below an immediate support near mid-1.2800s could get extended towards an important confluence support near 1.2770 area, comprising of 38.2% Fibonacci retracement level of 1.2365 to 1.3047 latest up-move and 50-day SMA region. The said support also coincides with a previous major resistance and hence, is the pair is unlikely to break the same in a hurry.”
“Alternatively, any up-move might continue to confront immediate resistance near the 1.2900 handle, closely followed by a strong hurdle near 1.2915-20 region (20-day SMA). On a sustained break through this important barrier, the pair is likely to aim towards 1.2965-70 horizontal resistance en-route the key 1.30 psychological mark,” Haresh adds.
Key notes
GBP/USD - Is UK services PMI a non-event?
“The odds are high that the improvement in manufacturing and construction activity may have boosted the demand for services, “Omkar – Analyst at FXStreet noted.
About 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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