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

The UK services PMI overview

The UK economy will release its January services PMI later in the European session at 0930GMT, which is expected to come in at 51.0 versus 51.2 booked in December. 

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: “From a technical perspective, the pair’s corrective slide from 3-1/2 month tops has been along a short-term descending trend-channel on short-term charts. Given the recent upsurge, the said channel seemed to constitute towards the formation of bullish continuation flag chart pattern and thus, support prospects for some dip-buying interest near the key 1.30 psychological mark. However, a convincing breakthrough the mentioned handle might negate the bullish set-up and prompt some fresh technical selling, turning the pair to accelerate the slide further towards testing an important resistance break-point, now turned support, near mid-1.2900s. On the flip side, the 1.3090-1.3100 area now seems to have emerged as an immediate strong resistance and is closely followed by the trend-channel hurdle, near the 1.3120 region.”

Key Notes

Forex Today: Not-dovish RBA boosts the Aussie; UK services PMI on tap

UK: Services PMI likely to decline to 50.5 in January - TDS

GBP futures: potential for a deeper decline

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.