UK Services Up Next. Another Dive for the GBP?
The UK services report is due to be released soon. Seeing as this is such a major one for the UK economy, it is very likely that it will have a big impact on the GBP today. It does account for about 4/5th of the UK economy, after all.
Yesterday the construction report came slightly below expectations, and the GNP lost about 100 pips as a result. I did believe that we would see some downside action if the numbers were negative, but I also advised to take profit if your forex trade was 50-60 pips, as there are more important reports for the UK economy than construction.
The top seems in place at 1.3615
That being said, the services report is quite important, since it is the biggest sector by far. Last month’s number was 53.8 PMI points, while today it is expected to increase to 54.1 points.
My belief is that we are going to see another red (negative) number today. If that’s the case, then I expect GBP/USD to begin the second part of the downside. This will be a big move if the number comes close to 53 points.
GBP/USD reached 1.3615 yesterday in the morning, which is a long term resistance area that stretches all the way to 1.3650. It failed to stay above 1.36 yesterday, meaning the trend may be changing for the GBP. As a result, I see the downside becoming more favourable in the near term.
If you are short on this forex pair and the UK services report is negative, I recommend keeping your position for 100 or even 200 pips.
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