The GBP/USD pair rose to an intraday high of 1.5244 levels in the European session before turning lower on the back of a disappointing UK services PMI report. The seasonally adjusted Markit/CIPS UK Services Business Activity Index fell to to 53.3, from August’s 55.6, indicating the weakest rate of growth since April 2013. The rate of expansion in new business slowed for the fifth time in six months in September.
Flurry of weak data ahead of BOE minutes
The Bank of England rate decision on Thursday will be immediately followed by the release of the minutes. Heading into the event, we have had a flurry of weak economic data out of the UK (at a time when the drop in the fed rate hike bets is pushing BOE away from its liftoff). The latest PMI reports show weaker manufacturing and service-sector activity.
Wednesday’s UK manufacturing and industrial production figure could also disappoint. The inflow of the new work (highlighted by PMI) was weak in July and August, while exports too have shown a sequential drop. Consequently, the spot could very well be trading around 1.5 handle before Thursday’s BOE rate decision.
Technicals – Bearish daily close opens doors for sub-1.51
Sterling’s failure to sustain above the rounding bottom neckline on the 4-hour chart on Monday, followed by a daily close below 1.5163 (Sep 4 low) indicates the pair is likely to extend the drop to 1.581 levels today. A minor uptick could run into offers around 1.5185 (23.6% of Jul 14-Apr 15 downtrend). On the higher side, only an hourly close above 1.5244 could open doors for 1.5330 (July 8 low).
EUR/USD Analysis: Pointing southwards to 1.11
The EUR/USD weakened on Monday, as disappointing service sector data from the Eurozone weighed over the EUR. Markit's services PMI for the EUrozone fell to 53.7 last month from 54.0 in August. The German service sector experienced slower growth as well. The pair clocked a high of 1.1289 in the European session, before falling back to 1.1220 and extending weakness in the NY session to 1.1173 levels.
Focus on risk sentiment
The EUR and other funding currencies remain at the mercy of the overall market sentiment today. The Asian stocks advanced for the fifth straight day. In case, the risk-on prevails in Europe and the US, the EUR could easily drop to 1.11 levels. Moreover, the common currency is also under pressure on rising expectations that ECB would increase its QE program in retaliation to the drop in the Fed and BOE rate hike bets. Consequently, the immediate prospects for an upside in the pair are very limited.
Technicals – Eyes set on 1.11
Euro’s repeated failures to rise above 1.13 since late September, despite weak US non-farm payrolls indicates the single currency is likely to ratchet lower to 1.11 levels today. A break below 1.11 could push the pair to 1.10505-1.1033 (red line in the chart). On the higher side, only a break above 1214 could see the pair make another attempt to take out the offers in the range of 1.1280-1.13.
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
AUD/USD post moderate gains on solid US data, weak Aussie PMI
The Australian Dollar registered solid gains of 0.65% against the US Dollar on Thursday, courtesy of an upbeat market mood amid solid economic data from the United States. However, the Federal Reserve’s latest monetary policy decision is still weighing on the Greenback. The AUD/USD trades at 0.6567.
EUR/USD recovers to top end of consolidation ahead of Friday’s US NFP
EUR/USD drove back to the top end of recent consolidation on Thursday, recovering chart territory north of the 1.0700 handle as market risk appetite regains balance heading into another US Nonfarm Payrolls Friday.
Gold recoils on hawkish Fed moves, unfazed by dropping yields and softer US Dollar
Gold price clings to the $2,300 figure in the mid-North American session on Thursday amid an upbeat market sentiment, falling US Treasury yields, and a softer US Dollar. Traders are still digesting Wednesday’s Federal Reserve decision to hold rates unchanged.
High hopes rouse for TON coin with Pantera as its latest investor
Ton blockchain could see more growth in the coming months after investment firm Pantera Capital announced a recent investment in the Layer-one blockchain, as disclosed in a blog post on Thursday.
NFP: The ultimate litmus test for doves vs. hawks
US Nonfarm Payrolls will undoubtedly be the focal point of upcoming data releases. The estimated figure stands at 241k, notably lower than the robust 303k reported in the previous release and below all other readings recorded this year.