The UK PMIs overview
The first Preliminary readings of the UK Manufacturing and Services PMIs for June are due for release today at 0830GMT.
The Preliminary UK Manufacturing PMI is expected to show that the contraction in the manufacturing sector activity eased further in June. The index is expected to arrive at 45.0 versus 40.0 last.
Meanwhile, the flash UK Services PMI is expected to rebound to 40.0 in June vs. 29.0 booked in May.
How could they affect GBP/USD?
The Cable consolidates the spike above 1.2500, as it now trades 0.07% higher at 1.2465. The immediate focus now remains on the UK Manufacturing and Services PMI releases.
NDDFX’s Analyst, Haresh Menghani, offers key technical levels for trading GBP/USD in the day ahead.
“The pair on Monday found a decent support near the 61.8% Fibonacci level of the 102076-1.2813 positive move. The subsequent momentum beyond the 50% Fibo. level faltered near the 1.2500 mark. This is closely followed by 38.2% Fibo. level, around the 1.2525-30 region, which if cleared might be seen as a fresh trigger for bullish traders. The pair might then accelerate the move towards reclaiming the 1.2600-mark en-route 23.6% Fibo. level, around the 1.2630 area.”
“On the flip side, sustained weakness back below 50% Fibo. level, around the 1.2440-35 zone, might turn the pair vulnerable to slide below the 1.2400 mark and head back towards challenging the 61.8% Fibo. support near the 1.2350-40 region,” Haresh adds.
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About the UK PMIs
The Manufacturing Purchasing Managers Index (PMI) released by both the Chartered Institute of Purchasing & Supply and the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the UK. A result above 50 signals is bullish for the GBP, whereas a result below 50 is seen as bearish.
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.