When is the UK Services PMI and how could it affect GBP/USD?

The UK Services PMI overview

The UK economy will release its September Services PMI later in the European session at 0830 GMT, which is expected to come in at 50.3, down from August’s 50.6 reading. 

Analysts at TD Securities noted, “we'll be watching to see how employment fares; the manufacturing and construction PMI reports earlier this week both highlighted accelerating job losses, and this looks to be a major risk to the UK economy, in general, going forward.” 

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: “It will be prudent to wait for a sustained breakthrough the 1.2200 handle – a support marked by 61.8% Fibonacci level of the 1.1958-1.2583 strong move up – before positioning for any further near-term depreciating move. Below the mentioned support, leading to a subsequent weakness below the 1.2170-65 horizontal zone, will set the stage for a slide towards testing sub-1.2100 levels.”

“On the flip side, the 1.2340-50 confluence region – comprising of 38.2% Fibo. level and 200-period EMA on the 4-hourly chart - might continue to cap the immediate upside and act as a key pivotal point for short-term traders. Sustained move beyond the said hurdle has the potential to lift the pair further beyond the 1.2370-75 intermediate resistance towards reclaiming the 1.2400 round-figure mark,” Haresh adds.

Key Notes

UK Politics and global PMIs amongst market movers today – Danske Bank

UK’s Barclay: Need EU to respond in constructive way

GBP Futures: further consolidation on the cards

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.