UK Services, The Final And Biggest Piece Of Data Before The BOE Meeting. Trade For GBP/USD?
On Tuesday the UK manufacturing report surprised the market as it came out better than the market was expecting. Exports jumped to the highest they've been since 2014 from what I can recall, so that improved the sentiment for the GBP, and added the feeling that Brexit might not be that bad.
GBP/USD rallied more than 100 pips that day, but that was more due to the relentless USD sell off we have seen during athis time.
Yesterday, the UK construction report brought back us back to the reality that comes along with Brexit. It dived from 54.8 PMI points to 51.9, which is close to contraction. Nevertheless, market sentiment provided to be stronger and GBP followed the Euro, climbing another 40 pips for the day.
Today is the big day though. As my colleague, Arlsan highlighted earlier in the morning brief the BOE (Bank of England) meeting is taking place at 12 GMT and Chairman Carney is giving a speech an hour later.
Before that though, the last piece of PMI data and the most important since it accounts for around 4/5th of the UK economy, is the services report. It is supposed to tick up 2 decimal points.
A positive number is likely to send the Pound higher, while the impact of a negative number will be limited according to the reaction we saw yesterday. On the other hand, services are not like construction; this is the biggest sector of the British economy by far.
Trade idea: If the number is bad, then we are likely to see some heavy GBP selling. Although I don´t see the downside (or the upside) extending too far, because forex traders tend to take sides before a central bank event (such as the BOE meeting later today). Selling or buying at spot according to the actual number and calling it a day after 50-80 pips would be the reasonable trade here.Â
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