UK Services PMI - Good Deviation higher but delayed spike

This Friday morning of February 3rd 2012 at 9:28 GMT (4:28 EST) the Services PMI figures were released out of the UK. This figure is a forward looking indicator for the UK economy because it measures the Purchasing Manager Index, and if the companies are buying more that usually means that they expect to sell more to the customers. Anyway these figures were quite bad in Q4 2011 getting quite close to the 50 level. The 50 level is key because below it signifies contraction and anything above it is considered growth. The PMI is for the Services sector which is the largest sector in the UK and so is quite important. There were prints below 50 in PMI for manufacturing last year but Services just managed to avoid it.

Last year this was probably the best economic news indicator to trade. It is quite simple for news trading as there is only 1 number and its revision, unlike other news which comes with Core and Headline, Month-on-Month, Year-on-year and so on. However in the past 3-4 releases there has been a move heading into the release, then despite what in the past have been good sized deviations capable of moving the British Pound pairs alot of pips has just seen a small 10-15 spike extension of the pre-news move, followed by a complete reversal below the pre-release price. This is dangerous as it can trap any traders who may have had some slippage or experience delay in getting their orders filled by their brokers. The pre-news move is often difficult to distinguish because it occurs in tandem with moves in other key major pairs such as the EURUSD, so whether it is a rumor or leak of a bullish UK data release or just general risk appetite or aversion is not distinguisable. Just when it nearly became reliable enough to fade the spike reversal on this number, today there was a tiny whipsaw but a few minute later the GBPUSD pair did rally. It is important to remember that although the news comes out at 28 minutes past the hour, some do not see the data until half past. This actually is when the pair did start to rally. It was a good sized positive deviation so it did do what it was suppose to do even with the move up heading into the release.

Here the figures:
UK PMI Services
Estimates- Average: 53.3 Average: 53.3 Range: 52.0 to 55.0
Actual: 56.0 Prior: 54.0 No Revision

First the 30 second chart of the GBPUSD pair, the release is marked with the red arrow:

next is the 5 minute chart which shows the run up in the GBPUSD heading into the news. The pair had another move higher and then started to top out. There was the US Non-Farm Payrole later in the day, so it was unlikely for the markets to move alot one way or the other before this:

Also here is the 30 second chart of the GBPJPY, it also moved up after 2 minutes like the GBPUSD:

For total coverage 30 second charts for GBPCHF, GBPAUD, GBPCAD, GBPNZD and EURGBP. Some moved with the news trading deviation, others did not so well. Spreads on some of these pairs can be a problem. Some have less liquidity than the major pairs, however some have less 'attention' which can help depending on your trading platform.