June 7, 2012

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 early this week, here´s the forecast:
4:28am (NY Time) UK Services PMI Forecast 52.5 Previous 53.3
Deviation: 2.5 ~ 3.5 (BUY GBP 55.0 / SELL GBP 49.9

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.

The Services PMI is tradable with a minimum deviation of 2.5~3.5 between the forecast and the actual release. If we get at least 55.0 or better, we could see some demand in the GBP and we will consider BUYING GBP against weaker currencies. If we get a 49.9 or lower, GBP could weaken and we should look to SELL GBP against stronger currencies.

Recommended Pairs : GBPUSD , GBPCHF

GBPUSD
Resistences : Weekly 1.5605 , Daily 1.555 , Hourly 1.551

Supports : Weekly 1.5325 , Daily 1.54 , Hourly 1.5445

BOOKS

EUR/GBP in a Nutshell: A Simple Guide on How to Trade the EUR/GBP in the Forex Market - Elena Sanchez - EUR 7,68
B006KXIPB2