When are the UK Preliminary PMIs and how could it affect GBP/USD?
The UK PMIs overview
The first Preliminary readings of the UK Manufacturing and Services PMIs for March are due for release today at 0930GMT.
The Preliminary UK Manufacturing PMI is expected to show that the pace of contraction in the activity quickened in March. The index is expected to arrive at 45.0 versus 51.7 last.
Meanwhile, the flash UK Services PMI is expected to rise to 45.0 in March vs. 53.2 booked in February.
How could they affect GBP/USD?
The Cable caught a fresh bid-wave and hit as high as 1.1695 in the last hour. The spot quickly reversed the spike and now trades near 1.1640 region, still up 0.82% on a daily basis. The gains in the currency pair are mainly driven by broad-based US dollar weakness, in response to the Fed’s unlimited QE announcement. The immediate focus now shifts towards the UK Manufacturing and Services PMI releases.
Should the data miss expectations, it would reverse the corrective upside in the spot, sending it back under 1.1600, below which the next supports are aligned at 1.1579 (pivot point) and 1.1500 (round number).
However, on upbeat readings, the GBP/USD pair could take-out the key 1.1700 resistance, above which 1.1741 (Mar 23 high) could be tested en route 1.1800 (zero figure).
Key notes
- UK PMIs Quick Preview: First coronavirus-linked read is a lose-lose situation for GBP/USD
- GBP Futures: Rebound in the offing
- GBP/USD Analysis: Rises on weaker USD, stronger above 1.1600 mark ahead of UK/US PMIs
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.