When is the UK services PMI and how could it affect GBP/USD?
UK services PMI overview
Monday's UK economic docket highlights the release of July services PMI, due later in the European session at 08:30 GMT. Consensus estimates point to a final reading of 50.2 during the reported month, unchanged from the previous and just above the contraction territory.
However, analysts at TD Securities anticipate the index to slide a bit lower to 49.9 in July and explained – “The manufacturing PMI held steady at 48.0 during the month, while the construction PMI is still at very low levels at only 45.3, so it's difficult to see any kind of recovery in services, given the downbeat sentiment in other sectors.”
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?
Ahead of the key release, the GBP/USD pair was seen struggling near multi-month lows, around the 1.2100 round figure mark. A convincing breakthrough the mentioned handle, leading to a subsequent weakness below the recent swing lows - around the 1.2080 region, now seems to set the stage for a move towards challenging the key 1.2000 psychological mark.
Meanwhile, any attempted recovery in reaction to stronger-than-expected reading seems more likely to remain limited amid increasing odds of a no-deal Brexit and confront some fresh supply near the 1.2185-90 region, which is closely followed by resistance near the 1.2225-30 zone. Sustained strength beyond the mentioned barriers might prompt some near-term short-covering move and lift the pair further towards reclaiming the 1.2300 handle.
Key Notes
• GBP/USD analysis: Bulls defy a sharp USD pullback amid persistent no-deal Brexit fears
• GBP/USD remains under pressure as Brexit uncertainty looms ahead of UK services PMI
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.