News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
UK Services PMI Disappoints, All Eyes on Thursday's General Election

UK Services PMI Disappoints, All Eyes on Thursday's General Election

Martin Essex, MSTA, Analyst

Talking Points

- The purchasing managers’ index for the UK services sector fell to 53.8 in May, below the 55.0 predicted.

- However, trading in Sterling and the FTSE 100 will be dominated this week by Thursday’s UK General Election and the opinion polls heading up to it.

- Check out the DailyFX Economic Calendar and see what live coverage of key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.

Trading in the British Pound is set to be volatile this week ahead of Thursday’s UK General Election and the opinion polls in the days heading up to it. The ruling Conservative Party is seen as more market-friendly than the opposition Labour Party so polls suggesting a large Conservative victory will likely be positive for Sterling while predictions of a hung Parliament or an outright Labour win will likely weaken it.

The latest polls have been mixed, forecasting a Conservative majority of anywhere between 12% and just 1% but the trend has been clearly downwards, which will likely make the markets’ jitters worse. It will also be important to see whether the polls change after the latest terrorist attack in London.

Against this background, UK economic data this week will be less important than usual but the purchasing managers’ index for the services sector, just released, was disappointing. The Services PMI fell to 53.8 in May from 55.8 in April, below forecasts of a fall to 55.0.That was its lowest level since February as a squeeze on consumers and election concerns dampened this most-important sector of the UK economy.

The Composite PMI, which combines services with manufacturing and construction, fell to 54.5 from 55.9, also the lowest since February. According to Markit/CIPS, which calculate the figures, they suggest UK second-quarter GDP will increase by 0.5% quarter/quarter, up from 0.2% in the first quarter but with downside risks.

The British Pound fell on the numbers, as a weaker than expected economy reinforces expectations that the Bank of England will keep UK interest rates low for the foreseeable future but soon recovered.

Chart: GBPUSD Five-Minute Timeframe (June 5 Intraday)

UK Services PMI Disappoints, All Eyes on Thursday's General Election

Chart by IG

--- Written by Martin Essex, Analyst and Editor

To contact Martin, email him at martin.essex@ig.com

Follow Martin on Twitter @MartinSEssex

If you’re looking for trading ideas, check out our Trading Guides; they’re free and updated for the second quarter of 2017

If you’re looking for ideas more short-term in nature, check out the IG Client Sentiment Data

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

DISCLOSURES