The GBP/USD pair fell to a low of 1.4326 on Wednesday after the UK construction PMI came in lower than expected. The growth in the construction sector in the UK dropped to its weakest in nine months in January after a short-lived recovery in December. However, the cable recovered losses, but still ended moderately lower on the day around 1.4407 levels.
Eyes UK services PMI report
On Monday, the manufacturing PMI came out better than expected with 52.9 points. Yesterday, Construction PMI misses estimates with 55.0 points. Today, we have the most important release of all - the services PMI. The number could rock Pound and alter expectations surrounding tomorrow’s BOE event.
The Services PMI for January is seen at 55.3 compared to Dec’s 55.5.
A better-than-expected number could single handedly send Sterling higher to 1.45 levels. The trades would also be interested to see if the sector continued to add jobs at a healthy rate in January. However, the employment number may not have an immediate effect, especially if the headline figure prints higher than Dec’s reading.
Meanwhile, a weaker-than-expected number could send the pair down to its 5-DMA at 1.4335. However, further losses are unlikely, unless the PMI figure is way below estimates and closer to 50.00 levels. In case, the PMI prints around estimates, the Cable could continue its chart-driven move higher.
Technicals – Rising trend line intact in the hourly chart
Sterling’s recovery from the 5-DMA yesterday after a bullish daily closing above 1.4413 on Monday indicates the currency pair remains on track to test 1.4476 (resistance on the hourly chart).
A break above 1.4476 could see the pair test 1.4519 (38.2% of 1.5230-1.4079).
Watch out for the rising trend line support currently seen at 1.4373. An hourly close below the same could deliver a big blow to the bulls as it would open doors for a drop to next critical support seen at 1.4250-1.4160 (falling trend line support).
EUR/USD Analysis: Strong resistance at 1.0940
The risk-off in the financial markets pushed the EUR/USD pair to a high of 1.0940, before profit taking pushed the currency pair back to 1.0918 levels. The currency pair made another attempt at 1.0940 in Asia but again was met with offers. The services PMI figures are due for release across the Eurozone. But again, the numbers may not receive much attention as the funding currency EUR is more focused on the broader market sentiment.
Technicals – Falling trend line resistance intact
Multiple failures to take out 1.0940 (falling trend line resistance + 61.8% of Mar to Aug) could send the pair down to 1.0890 (38.2% of 1.1495-1.0517).
A break below 1.0890 could send the pair lower to 1.0878 (10-DMA).
An intraday break above 1.0940 could result in a rally towards 1.10, but should be viewed with caution.
Moreover, only a daily close above 1.0940 would indicate a convincing bullish break
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD alternates gains with losses near 1.0720 post-US PCE
The bullish tone in the Greenback motivates EUR/USD to maintain its daily range in the low 1.070s in the wake of firmer-than-estimated US inflation data measured by the PCE.
GBP/USD clings to gains just above 1.2500 on US PCE
GBP/USD keeps its uptrend unchanged and navigates the area beyond 1.2500 the figure amidst slight gains in the US Dollar following the release of US inflation tracked by the PCE.
Gold keeps its daily gains near $2,350 following US inflation
Gold prices maintain their constructive bias around $2,350 after US inflation data gauged by the PCE surpassed consensus in March and US yields trade with slight losses following recent peaks.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.