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Pound Rallies on a PMI Services Beat

Pound Rallies on a PMI Services Beat

Benjamin Spier, Technical Strategist

THE TAKEAWAY: UK services PMI beats expectations at 54.9 -> Markit points to 0.5% growth in Q2 -> Pound rallies

The United Kingdom Purchasing Managers’ Index for services reached a new yearly high in May, according to Markit. The PMI was reported at 54.9, beating expectations for 53.1 and higher than the 52.9 April PMI result. A PMI reported above 50.0 indicates expanding sector activity.

New business increased at the sharpest pace in over three years, according to Markit. Service sector companies added jobs for the fifth consecutive month.

The three PMI’s in the UK all showed increasing activity in May, and Markit said GDP will rise 0.5% in Q2 if this pace of growth continues into June. “There’s good reason to believe growth can accelerate further. Across all three sectors, new business showed the largest jump for three years in May,” said Markit Chief Economist Chris Williamson.

The Pound rallied in the minutes leading up to and following the better than expected services PMI. GBP/USD is now trading slightly above 1.5350 at the time of this writing, and the pair may see resistance at 1.5375, by a three week high set recently. The previous resistance line at 1.5280 may now provide support.

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GBPUSD Daily: June 5, 2013

Pound_Rallies_on_a_PMI_Services_Beat_Ahead_of_BoE_Rate_Decision__body_gbpusd.png, Pound Rallies on a PMI Services Beat

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to instructor@dailyfx.com .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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