The UK services PMI overview
The UK economy will release its May services PMI later in the European session at 0830GMT, which is expected to come in a tad stronger at 53.0 versus 52.8 booked last.
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: “A convincing break below the 1.3300-1.3290 region, also coinciding with the trend-channel support would mark a fresh bearish breakdown and pave the way for a resumption of the pair’s prior depreciating slide. Below the mentioned support, the pair is likely to head back towards challenging the 1.3200 handle en-route 1.3180 support, marking 50% Fibonacci retracement level of the 1.1987-1.4377 strong bullish move.”
“On the upside, the 1.3345-50 region now seems to act as an immediate resistance and any subsequent up-move might continue to be capped at the 1.3400 handle. A convincing break through the mentioned barriers might trigger a short-covering bounce and lift the pair further towards 38.2% Fibonacci retracement level resistance near the 1.3465 region,” Haresh adds.
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.