Trading Plan For UK Services PMI 07/05/10

We’ll be trading the UK Services Purchasing Manager Index today at 4:30am (NY Time).  This is a leading indicator similar to the Manufacturing PMI that was released last week, here’s the forecast:

4:30am (NY Time) UK Services PMI     Forecast 55.1     Previous 55.4
ACTION: GBP/USD                        BUY 57.5         SELL 52.5

The Services PMI is tradable with a minimum deviation of 2.5 between the forecast release figure and the actual release.  If we get at least 57.5 or better, we could see some demand in the GBP and we will consider BUYING GBP/USD or GBP/JPY pairs.  If we get a 52.5 or worse release, GBP could weaken and we should look to SELL GBP/USD or GBP/JPY pairs.

With Sterling showing a strong sign of demand and recent confirmation of its sovereign AAA credit ratings, a better than expected figure could push GBP/USD up to new highs; a worse than expected release may not move GBP much as the overall sentiment is still rather optimistic; therefore I’d recommend to possible BUY from the bottom if the release is not a huge surprise to the downside.

UK’s economy is 73% Services related, if we get a strong release on this PMI, we could see GBP sentiment turn bullish.  With JPY reaching a strong resistance level and ready to consolidate, GBP/JPY may be the biggest winner if this release is surprisingly high.

Definition:

“The Chartered Institute of Purchasing and Supply (CIPS) Services Purchasing Manager’s Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation’s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.”

Related posts:

1. Forex News Trading Plan UK Services PMI 11/03/10
2. Forex News Trading Plan For UK Services PMI 10/05/10
3. UK Services PMI 01/06/10
4. UK Services PMI 02/03/10
5. UK Services PMI 03/03/2010
6. Forex News Trading UK Services PMI 12/03/10
7. UK Services PMI 04/07/10
8. Forex News Trading UK Services PMI 01/06/11
9. UK Services PMI 11/04/09

Tagged as: chartered institute of purchasing, chartered institute of purchasing and supply, currency, economic performance, Economy Services, GBP, institute of purchasing and supply, Inventories, Leading Indicator, PMI, purchasing manager, Purchasing Manager's Index, purchasing managers, Service PMI, Services PMI, Supplier Deliveries