The UK economy will release its September services PMI later in the European session at 0830GMT, which is forecast to tick lower from August’s 59.9 to 52.0 last month.
The business activity in the UK’s services sector is expected to stall its previous rebound and edge lower in Sept. The index had slumped to an 88-month low of 47.4 in July, in light of increased uncertainty post Brexit-vote.
A weaker PMI print is likely to exacerbate the pain in the GBP/USD pair, sending it further towards 1.26 handle, while a positive surprise may offer much-needed respite to the GBP bulls, sending the rate back beyond 1.2750 levels.
Analysts at TD Securities noted, “The services sector continues to remain in relatively healthy shape following the referendum, and until Article 50 is triggered then we should continue to see relatively stable growth in the sector, which represents 80% of the UK economy.”
Deviation impact on GBP/USD
Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 45 pips in deviations up to 3 to -2, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.
GBP/USD Technical Levels:
Haresh Menghani, Analyst at FXStreet notes, “With short-term indicators already pointing to oversold conditions, the pair is witnessing a rebound from a descending trend-channel support on 4-hourly chart. However, any recovery from near-term oversold conditions might now confront immediate resistance near 1.2760-70 region above which a bout of short-covering could assist the pair beyond 1.2800 handle, towards another strong resistance near 1.2840 area.”
“Meanwhile on the downside, the descending trend-channel support, near 1.2700 region, might continue to limit any immediate downslide. However, failure to hold this immediate strong support would turn the pair vulnerable and trigger a fresh leg of depreciating move for the pair.”
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.